The IRS just issued the standard mileage rates for 2018, and the latest figures are a departure from what Finance pros are probably used to seeing from the feds.
After several years of decreasing the rates, the IRS is bumping up the mileage rates for 2018.
This year, the standard mileage rate increased to 54.5 cents for each mile driven for business purposes, an increase of one cent from 2017’s amount.
In addition to the standard rate, the feds bumped the mileage rate for medical or moving purposes by a cent as well. For 2018, the medical or moving mileage rate is 18 cents per mile.
The mileage reimbursement rate for charitable service, however, will remain unchanged at 14 cents per mile in 2018.
Of course, companies can reimburse employees at a higher amount than the standard rates. But if employees are reimbursed for business travel at a higher amount than the IRS rates, then that amount becomes taxable income.
Another reimbursement option
If employers don’t want to use the miles driven reimbursement approach, IRS offers another option: Reimbursing workers for the fixed and variable costs of owning and operating an automobile.
IRS sets a maximum standard automobile cost to calculate these payments.
So, for 2018, the cost can’t exceed:
- $27,300 for cars (down $600 from 2017), and
- $31,000 for trucks and vans (down from $300 in 2017).
This story was originally published on our sister website, HR Morning.