Using your vehicle for business, charitable, medical or moving purposes could still qualify you for a tax deduction. As usual, deductibility depends on your particular situation. So, if you qualify, how much is that deduction worth? Again, it depends.
One option is to take the standard mileage tax deduction, which is determined each year by the Internal Revenue Service, based on IRS data about the cost of operating and maintaining a vehicle. A “vehicle” includes passenger cars, vans, pickups or panel trucks.
The IRS recently issued the new standard mileage rates used to calculate the deductible costs of operating a vehicle for business, charitable, medical or moving purposes. Beginning on January 1, 2019, the standard mileage rates for the use of a vehicle will be:
- 58 cents per mile driven for business use, up 3.5 cents from the rate for 2018,
- 20 cents per mile driven for medical or moving purposes, up 2 cents from the rate for 2018, and
- 14 cents per mile driven in service of charitable organizations. The charitable rate is set by statute and remains unchanged.
Sounds great, right? Those mileage rates can really add up. Just remember that there are limitations and exclusions, some of which got stricter under the Tax Cuts and Jobs Act. Under these limitations, taxpayers cannot:
- Claim a miscellaneous itemized deduction for unreimbursed employee travel expenses.
- Claim a deduction for moving expenses, except members of the Armed Forces on active duty moving under orders to a permanent change of station.
- Use the business standard mileage rate for a vehicle after using any depreciation method or after claiming a Section 179 deduction for that vehicle.
- Use the business standard mileage rate for more than four vehicles simultaneously.
Also remember that you always have the option of calculating the actual costs of using your vehicle instead of using the standard mileage rates. You have to track your mileage for each vehicle no matter which method you use. Compare the standard mileage calculation to the actual cost. You can select whichever option results in a higher deduction.
Taking vehicle deductions involves a lot of tracking, but the effort can be worth it. Those deductions can really add up, especially with the new standard mileage rates issued by the IRS for 2019 to operate a vehicle for business, charitable, medical or moving purposes.