Many people use their vehicles for business purposes and need to calculate this usage into deductible costs. With the lower gas prices as of January 1, 2017, the standard mileage rates for the business use of a vehicle is 53.5 cents per mile driven. This rate is lower than the 2016 rate of 54 cents per mile.
This rate is important for both employees and business owners as some companies offer a reimbursement to their employees for mileage incurred on a business trip. Employees will receive a reimbursement, which does not have to be reported as income, and business owners get an additional deduction.
Taxpayers can also calculate the actual cost of using their vehicles for business by tracking actual expenses, including gas, repairs, maintenance, and insurance costs. However, it is usually easier to use the standard mileage rate multiplied by the total business miles. With either option, it is important to keep records of the mileage and purpose of each trip. With the advent of technology, there are quite a few handy apps that can be used to track and record this information.
The bottom line is to use the correct year’s standard mileage rate when calculating costs.