IRS Introduces New Mileage Rates for 2021
January 11, 2021
The Internal Revenue Service (IRS) recently issued new standard mileage rates for 2021. The rates apply to businesses whose employees operate an automobile for business, charitable, medical or moving purposes. DM Payroll Solutions breaks down the new mileage rates so you and your employees can plan appropriately for the coming year.
Beginning Jan. 1, 2021, the standard mileage rates for cars, vans, pickups and panel trucks will be as follows:
- 56 cents per mile for business purposes
- 16 cents per mile for medical or moving purposes
- 14 cents per mile for charitable purposes
Compared to 2020’s amounts (57.5 cents per mile for business purposes and 17 cents per mile for medical and moving purposes), the new rates have dropped.
As a result of the Tax Cuts and Jobs Act, taxpayers can no longer claim a miscellaneous itemized deduction for reimbursed employee travel expenses. However, active-duty members of the Armed Forces are still able to claim a deduction for moving expenses.
In the event an employee’s actual costs of operating their vehicle for business purposes are higher than the new rates, they may deduct a higher amount if they document their actual expenses.
To learn how DM Payroll Solutions can help adjust your payroll so you can reimburse your employees with 2021’s new mileage rates, contact us today.