How many small business owners don’t include the use of their vehicle as a tax deduction? Probably more than you think and those that do usually don’t get all the deductions they are qualified for. Deduction rules change every year so you need to keep up.
What is the vehicle mileage rate in 2016? How much tax can you deduct from business miles?
If you drive a car, van, pickup or panel truck for your business, the rate of deductible tax on your miles has changed. Beginning January 1 2016 the standard mileage rate has decreased for business, medical practices and movers.
If you operate a vehicle for business, medical, or moving uses the amount of deductible tax you can claim will be less than the previous year. The rate for charities has remained the same.
What is the standard mileage rate in 2016?
Using a vehicle as a business – The amount of deductible tax you can claim for has dropped from 57.5 cents in 2015 to 54 cents in 2016. This rate is decided with an annual study of fixed and variable operating costs for automobiles.
Using a vehicle as a charitable organization – The amount you can claim for each mile is now 14 cents per mile.
Using a vehicle for medical or moving purposes – The standard rate per mile is now 19 cents, down from 23 cents in 2015.
As the price of oil continues to drop worldwide, we have subsequently seen the standard mileage rate change. All businesses should be aware of the new rates for 2016.
If you wish to claim the standard mileage rate as a business, you cannot do so for more than 4 vehicles used at the same time. As a business taxpayer you cannot use the standard mileage rate for any vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS). This also applies to taxpayers claiming a section 179 deduction on that vehicle.
You may still claim for the actual costs of using your vehicle instead of using the standard mileage rate.
If you have questions about deductions for 2015, ask your accountant. If you need help with keeping your tax records organized and maintained in 2016, call us: 203-464-3848