The Internal Revenue Service (IRS) issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. The standard mileage rate for business miles driven will be 51 cents per mile, up from 50 cents per mile in 2010.
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Download NowUpdated: For information on 2012 mileage rate, read IRS Announces 2012 Standard Mileage Rates
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The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study.
Beginning on January 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 51 cents per mile for business miles driven
- 19 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
While there was a 1 cent increase this year in cents per mile for business miles driven, the rate (51 cents per mile) is still lower than the rate in 2009 (55 cents per mile), and the second half of 2008 (58.5 cents per mile.)
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
Employers that use the IRS standard mileage rate to reimburse employees may deduct the reimbursement as a business expense. If employers use the approved rate (or a lower rate), the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses.
Revenue Procedure 2010-51 contains additional details regarding the standard mileage rates.
Related resources:
BLR Survey: More Employers Paying IRS Maximum Mileage Allowance
Important Tax Dates for Employers
Get the plain-English facts about dealing with mileage and commuting expenses for employees in our Mileage/Commuting Reimbursements Webinar Recording.