2020 has been a challenging year for many businesses, and the last thing you need on your plate as January approaches is to stress out about tax deductions. If your employees transport packages, deliver food, visit clients all over the country, or do any other sort of work that requires them to drive, you might be overwhelmed by the math that goes into figuring out how much you owe them for their business miles and what reimbursement method to use. That’s why we’ve provided all the basic information you need to make the process as simple as possible.
Read on to learn more about the IRS standard mileage rates over the past several years, our predictions for the 2021 rate, and reimbursement plans based on actual vehicle expenses, and how to save your business as much time and money as possible in the reimbursement process.
IRS Standard Mileage Deduction Rates for 2020 and Previous Years
|2020 Standard Mileage Deduction Rate||57.5 cents|
|2019 Standard Mileage Deduction Rate||58 cents|
|2018 Standard Mileage Deduction Rate||54.5 cents|
|2017 Standard Mileage Deduction Rate||53.5 cents|
|2016 Standard Mileage Deduction Rate||54 cents|
|2015 Standard Mileage Deduction Rate||57.5 cents|
|2014 Standard Mileage Deduction Rate||51 cents|
|2013 Standard Mileage Deduction Rate||56 cents|
|2012 Standard Mileage Deduction Rate||55.5 cents|
|2011 Standard Mileage Deduction Rate(s)||51 cents
|2010 Standard Mileage Deduction Rate||50 cents|
Who is eligible for the IRS standard mileage rate deduction?
If you have employees whose responsibilities require them to be on the road, they’ll need to be compensated for the expenses associated with driving. The IRS outlines which workers qualify for reimbursement through the standard business mileage deduction rate in their commuting mileage rules. Employees who need to travel to a location other than their home or workplace for business purposes, travel between two different workplaces, or travel between home and a temporary job site where they will be working for less than a year all qualify under the established guidelines.
What is the standard mileage rate in 2021?
While the 2021 IRS standard mileage rate has yet to be officially announced at this particular time, it is safe to assume that next year’s standard business mileage rate, medical mileage rate, and charity mileage rate will remain fairly consistent and hover somewhere around their 2020 values. We will update this article accordingly when the IRS provides exact numbers.
In the meantime, it never hurts to use previous years’ mileage reimbursement rates as a tool for estimating how much you’ll need to reimburse your employees in 2021 if you choose to use the government standard mileage rate.
Previous years’ standard mileage rates
When attempting to predict the federal mileage rate for 2021, the first question you should be asking is, “What is the standard mileage rate in 2020?” As you can see from the chart at the bottom of this page, which documents information officially provided by the IRS, the standard business mileage rate is 57.5 cents per mile this year. This is a mere 0.5 cent decrease from 2019, and the rest of the 2010s have also consistently had rates in the 50s, with rates from one year to the rest never increasing or decreasing by more than 5 cents per mile since the 2008 recession.
While 2020 has been something of an unpredictable year, it seems probable that the 2021 business mileage rate will be in the mid-to-high 50s or low 60s when taking the above numbers into consideration. Even if there is another dramatic 5 cent change, the number would remain somewhere between 52.5 and 62.5 cents per hour.
If you’re curious about the medical mileage rate or charity mileage rate, you can take a peek at the past decade’s trends on the official IRS website to aid in your estimation of the 2021 rates.
Standard mileage rate vs. actual vehicle expenses
Using the standard mileage reimbursement rate isn’t the only option for business owners with mobile employees. If your employees drive a total of 5000 or more business miles a year and meet some other standards set by the IRS, you can choose to employ a Fixed and Variable (FAVR) rate, which reimburses employees for actual vehicle expenses including
including the cost of gas, insurance, repairs, tolls, parking, and several other factors. You can view the complete list of expenses for which the IRS requires employee reimbursement here.
Most businesses opt for reimbursement based on the standard mileage rate for simplicity’s sake, but this is not always the most financially advisable method. Luckily for you, the decision of whether or not to implement a FAVR plan is now easier than ever thanks to our company mileage reimbursement calculator. Just input some information about your company, and you can determine if a FAVR plan will save you money in a matter of seconds.
How to keep IRS compliant mileage reports?
If you decide that a FAVR plan is right for your business, Everlance Teams, the highest-rated company mileage tracking app, can help you customize the reimbursement system that best meets your needs without needlessly taking hours of time out of your busy schedule.
Everlance Teams uses GPS tracking to monitor your employees’ driving, separating business trips from personal trips, to keep accurate logs of deductible miles. The team admin dashboard allows you to view this information, along with individual and team expenses and receipts, all in one convenient place. We’re proud to boast that this organizational system saves the average user a whole two hours a month on accounting.
If you’re ready to keep track of your employees’ business driving records with an app that 85% of users say makes their reports more accurate than ever before, today is the day to sign up for Everlance Teams. It takes no more than seven minutes to get started saving both time and money for the business you work hard to run.