Tax Reform Affects Moving, Mileage & Travel ExpensesJune 11, 2018 Alert
On May 25, the IRS released Notice 2018-42, detailing changes from the Tax Cuts and Jobs Act impacting vehicle expenses and un-reimbursed employee expenses.
On May 25, 2018, the IRS released Notice 2018-42 which provides information to taxpayers and employers about changes from the Tax Cuts and Jobs Act which impact move related vehicle expenses, un-reimbursed employee expenses and vehicle expensing.
More Related Vehicle Expenses
The Tax Cuts and Jobs Act suspended the deduction for moving expenses for tax years beginning after December 31, 2017 and ending before January 1, 2026. Therefore, no deduction is allowed for use of an automobile as part of a move using the mileage rate listed in Notice 2018-03 released prior to the Tax Cuts and Jobs Act. This suspension does not apply to members of the Armed Forces of the United States on active duty who move pursuant to a military order related to a permanent change of station.
Un-Reimbursed Employee Expenses
The Tax Cuts and Jobs Act suspended all miscellaneous itemized deductions that are subject to the 2% of adjusted gross income floor. This change affects un-reimbursed employee expenses such as uniforms, union dues and the deduction for employee travel expenses such as business-related meals, entertainment and travel costs. The suspension is for tax years beginning after December 31, 2017 and ending before January 1, 2026.
Standard Mileage Rate for 2018
As stated in Notice 2018-03, the standard mileage rates for the use of a car, van, pickup or panel truck for 2018 remain as follows:
- 54.5 cents for every mile of business travel driven, a 1 cent increase from 2017
- 18 cents per mile driven for medical purposes, a 1 cent increase from 2017
- 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Increased Depreciation Limits
The Tax Cuts and Jobs Act increased the depreciation limitations for passenger automobiles placed in service after December 31, 2017, for purposes of computing the allowance under a fixed and variable rate plan. The maximum standard automobile cost may not exceed $50,000 for passenger automobiles, trucks and vans placed in service after Dec. 31, 2017. Previously, the maximum standard automobile cost was $27,300 for passenger automobiles and $31,000 for trucks and vans.