The lower gas prices are going to be reflected in the mileage rates for 2016. The IRS just announced that beginning January 1, 2016, standard mileage rates will be:

  • 54 cents per mile for business miles, down from 57.5 cents for 2015
  • 19 cents per mile for medical or moving purposes, down from 23 cents for 2015
  • 14 cents per mile for service for charitable organizations

The rates are calculated based on an annual study of the fixed and variable costs of operating a vehicle, and the rate for medical and moving purposes is based on the variable costs.

Remember that you also have the option of calculating the actual costs of using your vehicle instead of using the standard mileage rates. But you can’t use the business mileage rate if you’re also using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for your vehicle. Also, the business mileage rate can’t be used for more than four vehicles simultaneously.