The IRS has announced new mileage rates for 2019, amounting to an increase in the rates for small businesses.
The new rates are:
- 58 cents per mile for each business mile, up 3.5 cents from 54.5 cents for 2018;
- 20 cents per mile to cover moving or medical purposes, up 2 cents from 18 cents for 2018;
- 14 cents per mile driven for charitable organizations.
According to Small Business Trends:
The Tax Cuts and Jobs Act has also had a major impact on where the standard mileage deduction rate can be used. Under the new law, no claim is possible for a miscellaneous itemized deduction on employee travel expenses that are unreimbursed. There is also no deduction for employee moving expenses with the exception of Armed Forces members on active duty to a permanent change of station under orders.
The IRS explains, “The Tax Cuts and Jobs Act also suspends all miscellaneous itemized deductions that are subject to the 2 percent of adjusted gross income floor. This change affects un-reimbursed employee expenses such as uniforms, union dues and the deduction for business-related meals, entertainment and travel”
The IRS sets these rates every year for small businesses including medical and moving expenses after looking at the fixed and variable costs of operating a vehicle for business. The numbers are calculated based on averages of what it costs to drive a vehicle for business. The factors include maintenance, repair and the amount of gas used. It’s important to remember the variable rate only applies for moving and medical expenses.
Sterling Accounting keeps track of tax changes and IRS actions to serve both businesses and individuals.
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