Great news this week from the IRS. For those drivers that use their personal vehicle for business, the expense rate has been upped to 57.5 cents per mile for 2015.
Millions of Americans use their vehicle in some capacity for work. Those work-related miles are tax-deductible. Although there are three different methods by which business miles can be expensed, the most popular way is the simple mileage tax deduction rate. Business drivers simply keep a log of miles driven for business then multiply those miles by a fraction of a dollar to come up with the amount they can deduct from their taxable income. For example, in 2014 a salesperson who drove 9,000 miles calling on customers would multiple 9,000 by the current government mileage rate. That rate is presently 56 cents per mile. Thus, the salesperson would be able to deduct $5,040 from taxable income.
Although that penny and a half increase per mile might not seem like much, gasoline prices have dropped dramatically recently. Yet, the government still approved this increase. An organization called Runzheimer International has been the government’s go-to source for vehicle cost data for many years. Runzheimer calculates the cost of operating a 4-door, mid-sized sedan. The organization includes all manner of costs in its analysis, including depreciation, maintenance, insurance costs, and of course fuel. The organization then provides its data to the US government which reviews it and approves the rate. Runzheimer also provides vehicle tax services to many businesses in the US.
One little detail overlooked by many who drive company cars, or who use their own vehicle for business, is that one’s commute to their primary workplace is never an expenseable mile. Only visits to customer sites, vendor sites and meetings away from one’s primary workplace can legally be deducted.
Main story image courtesy of Merit Mile. IRS logo courtesy Wiki Commons.