IRS Notice 2016-01 was issued on December 17, 2015 announcing the 2016 standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

 

Effective January 1, 2016, the business standard mileage rate (including vans, pickup trucks, and panel trucks) decreases from $0.575 per mile to $0.540 and the rate for medical and relocation decreases from $0.230 per mile to $0.190. Mileage related to charity is based on statute and remains at $0.140 per mile.

 

Summary of Revised Standard Mileage Rates

 

Type of mileage Effective January 1, 2015 Effective January 1, 2016
Business Standard $0.575 $0.540
Charity $0.140 $0.140
Medical & Relocation $0.230 $0.190

 

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

 

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

 

Where Employers can Find More Details

 

To learn more about Notice 2016-01 go to: https://www.irs.gov/pub/irs-drop/n-16-01.pdf

 

Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager.

 

 

This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.