What is a Standard Mileage Rate? (with pictures)

Nicole Madison
Nicole Madison
An employee may have to submit fuel receipts to verify that the company's money was spent on gasoline.
An employee may have to submit fuel receipts to verify that the company's money was spent on gasoline.

A standard mileage rate is a fixed monetary amount a tax agency or government sets for each mile a taxpayer drives. This rate is used in deducting driving expenses if the taxpayer did the driving for business or charitable purposes. Often, tax agencies also set a standard mileage rate for determining the amount a taxpayer can deduct for driving done in relation to medical needs or relocating for employment or business purposes. In many cases, a standard mileage rate is used for deductions on tax returns instead of the actual amount of expenses the taxpayer incurred. The manner in which such deductions are handled may, however, depend on the country, region, and tax agency.

Miles driven while moving for a job may be deductible.
Miles driven while moving for a job may be deductible.

Though many people might like to deduct the automobile expenses they pay in a given tax year, automobile deductions aren't usually allowed for the majority of taxpayers. In some jurisdictions, however, a person does have the right to deduct automobile expenses from the taxes he is required to pay each year. For example, an individual may have the right to deduct vehicle expenses if he runs a business or incurred vehicular expenses in relation to a charity. A person may also have the right to deduct expenses he incurred during medical travel. Miles driven while relocating for employment reasons may be deductible as well.

When a person uses a standard mileage rate on his tax return, he does not need the exact monetary amounts he spent for his automobile in order to figure out the amount of the deduction he can take. Instead, he only has to know the number of miles he drove in order to take a vehicle expense deduction on his tax return. He can typically multiply the number of miles he drove by the standard mileage rate set by the tax agency. This rate may change from year to year, so a person usually has to check with the tax agency to learn which figure to use.

Depending on the jurisdiction, a person may alternatively choose to list the actual expenses for his vehicle on his tax return. This may include such things as gas and oil, repairs, maintenance, and insurance costs. A person may also deduct fees for licensing and registration, supplies required for the automobile, and depreciation. Often, lease payments, loan interest, and certain vehicle-related taxes are deductible as well. A person with vehicle expenses may choose to use the standard mileage rate since it allows for much simpler calculations, but determining actual expenses may be more beneficial if vehicle operating costs are high.

Nicole Madison
Nicole Madison

Nicole’s thirst for knowledge inspired her to become a writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

Nicole Madison
Nicole Madison

Nicole’s thirst for knowledge inspired her to become a writer, and she focuses primarily on topics such as homeschooling, parenting, health, science, and business. When not writing or spending time with her four children, Nicole enjoys reading, camping, and going to the beach.

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    • An employee may have to submit fuel receipts to verify that the company's money was spent on gasoline.
      An employee may have to submit fuel receipts to verify that the company's money was spent on gasoline.
    • Miles driven while moving for a job may be deductible.
      Miles driven while moving for a job may be deductible.