New Mileage Rates Announced for 2020
On December 31, 2019, the IRS released Notice 2020-05 which establishes new standard mileage rates and related automobile expense deduction limits for 2020.The standard mileage rate for transportation or travel expenses is 57.5 cents per mile for all miles of business use (business standard mileage rate).However, Section 11045 of the Tax Cuts and Jobs Act, Public Law 115-97, 131.Stat.2054 (December 22, 2017)(the “TCJA”)suspends all miscellaneous itemized deductions that are subject to the two percentof adjusted gross income floor under Section 67, including unreimbursed employee travel expenses for taxable years beginning after December 31, 2017 and before January 1, 2026.Thus, the business standard mileage rate provided in the Notice cannot be usedto claim an itemized deduction for unreimbursed employee travelexpenses during the suspension period.
The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitousservices to a charitable organization under Section 170.The standard mileage rate is 17 cents per mile for use of an automobile (1) for medical care described in Section 213; or (2) as part of a move for which the expenses are deductible under Section 217(g).Again, the TCJA suspends the deduction for movingexpenses for taxable years beginning after December 31, 2017 and before January 1, 2026.The suspension rules for these deductions do not apply to members of the Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station.
For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 27 cents per mile for 2020.
Finally, for computing the allowance under a fixed and variable rate allowance plan (FAVR)and the Vehicle-Cents-Per-Mile-Valuation Rule, the maximum fair market value of automobiles, including trucks and vans, first made available to employees in calendar year 2020 is $50,400.