What Is the IRS Mileage Rate for 2021?

The Internal Revenue Service (IRS) standard mileage rate offers a simplified method for taxpayers to calculate the deductible costs associated with operating a vehicle for specific purposes. This rate provides a standardized per-mile amount that covers the average expenses of fuel, oil, maintenance, depreciation, and insurance. The IRS reviews and adjusts these rates annually to reflect changes in vehicle operating costs. This allows individuals to claim deductions for qualified travel without tracking every expense.

The 2021 Standard Mileage Rates

For the 2021 tax year, the IRS set specific standard mileage rates for different categories of vehicle use. Business travel was deductible at 56 cents per mile. This rate is designed to cover the comprehensive costs of operating a vehicle for business activities, including fixed and variable expenses like depreciation, maintenance, and fuel.

Travel for medical purposes or for qualified moving expenses (for eligible active-duty military members) was deductible at 16 cents per mile in 2021. This rate primarily accounts for the variable costs of operating a vehicle, such as gas and oil. The rate for miles driven in service of charitable organizations remained at 14 cents per mile. This charitable mileage rate is set by federal statute and is not subject to annual adjustments by the IRS.

Who Can Use the Rates and For What Purposes

The ability to use the standard mileage rate depends on your tax filing status and the purpose of your travel. Self-employed individuals, including independent contractors, freelancers, and small business owners, are able to use the business mileage rate to deduct qualified travel expenses.

Employees, however, cannot deduct unreimbursed employee business expenses, including mileage, due to changes enacted by the Tax Cuts and Jobs Act of 2017. For medical travel, the mileage rate applies to transportation costs primarily for, and essential to, medical care.

The moving expense deduction, which can be calculated using the mileage rate, is highly restricted for 2021. It applies only to members of the armed forces on active duty who move due to a military order. Travel performed for the benefit of a qualified charitable organization also qualifies for the charitable mileage rate. The standard mileage rate does not cover all vehicle-related expenses; tolls, parking fees, interest on a car loan, and state or local personal property taxes on the vehicle may be deductible separately.

Documentation Requirements

To substantiate claims for mileage deductions, taxpayers must maintain accurate and contemporaneous records. For every journey, you should record the date of travel, the total mileage driven, the destination, and the specific business, medical, moving, or charitable purpose of the trip.

Methods for keeping these records can include physical mileage logs, specialized mobile applications, or digital spreadsheets. Without proper documentation, the IRS may disallow claimed mileage deductions during an audit.