Anyone who has filled their vehicle’s fuel tank in the past year could not help but notice the dramatic drop in the cost of gasoline. From a high of $2.79 per gallon (the national average reported by AAA) in June, gas prices have fallen to an average of $1.99 per gallon in mid-December. Drivers no longer cringe while watching the fuel pump gauge wind its way upward.
But with the good comes the bad. Because the overall cost of driving a vehicle has plummeted with the decline in fuel prices, the Internal Revenue Service (IRS) has seen fit to reduce the standard mileage rate from 57.5 cents per mile in 2015, to 54.0 cents per mile in 2016. This is the rate that may be applied for the business use of a car, van, pickup truck, or panel truck.
Driving for medical or moving purposes may be deducted at 19 cents per mile, down from 23 cents per mile in 2015. The rate for service to a charitable organization is unchanged at 14 cents a mile. The portion of the business standard mileage rate that is treated as depreciation will be 24 cents per mile for 2016, the same as 2015.
For more information on mileage rates and answers to other tax deduction questions please contact the Gray, Gray & Gray Tax Department at (781) 407-0300.