Category: 

What is a Standard Mileage Rate?

Article Details
  • Written By: N. Madison
  • Edited By: Jenn Walker
  • Last Modified Date: 19 September 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
The U.S. Coast Guard led the evacuation of more than 500,000 people from Lower Manhattan on 11 September 2001.  more...

September 27 ,  1940 :  The World War II Axis powers formed with the signing of the Tripartite Pact.  more...

A standard mileage rate is a fixed monetary amount a tax agency or government sets for each mile a taxpayer drives. This rate is used in deducting driving expenses if the taxpayer did the driving for business or charitable purposes. Often, tax agencies also set a standard mileage rate for determining the amount a taxpayer can deduct for driving done in relation to medical needs or relocating for employment or business purposes. In many cases, a standard mileage rate is used for deductions on tax returns instead of the actual amount of expenses the taxpayer incurred. The manner in which such deductions are handled may, however, depend on the country, region, and tax agency.

Though many people might like to deduct the automobile expenses they pay in a given tax year, automobile deductions aren't usually allowed for the majority of taxpayers. In some jurisdictions, however, a person does have the right to deduct automobile expenses from the taxes he is required to pay each year. For example, an individual may have the right to deduct vehicle expenses if he runs a business or incurred vehicular expenses in relation to a charity. A person may also have the right to deduct expenses he incurred during medical travel. Miles driven while relocating for employment reasons may be deductible as well.

Ad

When a person uses a standard mileage rate on his tax return, he does not need the exact monetary amounts he spent for his automobile in order to figure out the amount of the deduction he can take. Instead, he only has to know the number of miles he drove in order to take a vehicle expense deduction on his tax return. He can typically multiply the number of miles he drove by the standard mileage rate set by the tax agency. This rate may change from year to year, so a person usually has to check with the tax agency to learn which figure to use.

Depending on the jurisdiction, a person may alternatively choose to list the actual expenses for his vehicle on his tax return. This may include such things as gas and oil, repairs, maintenance, and insurance costs. A person may also deduct fees for licensing and registration, supplies required for the automobile, and depreciation. Often, lease payments, loan interest, and certain vehicle-related taxes are deductible as well. A person with vehicle expenses may choose to use the standard mileage rate since it allows for much simpler calculations, but determining actual expenses may be more beneficial if vehicle operating costs are high.

Ad

You might also Like

Recommended

Discuss this Article

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email