Standard mileage rate is a basic tax deduction per mile offered by the IRS for individuals traveling for business, medical, and charitable purposes. An individual must report the amount of covered miles to the IRS in order to claim a tax deduction, and the individual must either use the standard mileage rate or calculate their actual costs per mile. Calculating the cost yourself can be challenging and requires receipts for all gas and auto upkeep. Instead, an individual can simply multiply their mileage by the standard mileage rate and receive that for a tax deduction. For example, Mary used 1,000 business miles, and she used the business standard mileage rate of 50 cents per mile. She could deduct $500 from her taxable income. Standard mileage rates differ for business, medical, and charitable deductions because business deductions take into consideration other auto costs while medical and charitable deductions usually only include fuel costs. The rates as of 2021 were 56, 14, and 16 cents per mile for business, charitable, and medical expenses respectively. For updated and old standard mileage rates, click here.
[Last updated in August of 2021 by the Wex Definitions Team]