By Mary Ellen Schill
December 21, 2015
The Internal Revenue Service has announced the optional standard mileage rates for computing the deductible cost of operating an automobile for business, medical, and moving expenses for 2016, and the reduced rates reflect the decrease in gasoline prices. Effective January 1, 2016, the optional standard mileage rates will decrease to 54 cents per mile for business transportation, and decrease to 19 cents per mile for travel relating to medical and moving transportation expenses.
These mileage rates apply only to those expenses incurred or paid by a taxpayer on or after January 1, 2016 (and if reimbursed by an employer, reimbursed by the employer on and after that date). Expenses incurred prior to January 1, 2016 (whether reimbursed by the employer before or after that date) are still subject to the old 2015 rates (57.5 cents for business transportation, 23 cents for medical and moving transportation). The standard mileage rate for the deduction for charitable contributions remains unchanged from 2015 at 14 cents per mile.
This change in mileage rates is relevant to employers that reimburse employees for business transportation based on mileage. While there is no legal requirement that employees be reimbursed at the IRS standard rate, many employers have a policy of doing so. As a reminder, any payments to an employee based on business travel at a rate in excess of the IRS standard rate generally is taxable income to the employee.
If you have questions regarding the above, please contact Mary Ellen Schill, the author of this article, or any of the attorneys in the Employment, Benefits & Labor Relations Practice Group of Ruder Ware.
This document provides information of a general nature regarding legislative or other legal developments, and is based on the state of the law at the time of the original publication of this article. None of the information contained herein is intended as legal advice or opinion relative to specific matters, facts, situations, or issues, and additional facts and information or future developments may affect the subjects addressed. You should not act upon the information in this document without discussing your specific situation with legal counsel.
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