For 2019 the Federal mileage reimbursement rate has increased 3.5 cents to 58 cents per mile. This may mean better deductions on business taxes for 2019 but also increased cost if you have a workforce that uses personal vehicles.
Actual Costs and the Mileage Rate
A business can usually deduct expenses related to vehicle use on their taxes. This can be things like gas, maintenance, insurance, and even deprecation. To do this though a business will need to keep records of all those costs.
The mileage rate is used when businesses don’t want to have to track all those individual expenses. There is still a requirement to track the mileage, date, and destination but that is far easier to do.
The mileage rate is also popular as a reimbursement for employees that use their personal vehicles for work purposes. The reimbursement becomes more important since the Tax Cuts and Jobs Act eliminated the deduction for unreimbursed employee business expenses.
Make sure to keep records with either method. If there is no proof of the mileage then the reimbursement might end up being considered taxable wage.
More considerationsCertain things like how you’re claimed vehicle deductions in the past and whether or not the vehicle is new to your business may create situations where you can’t use the mileage rate. It is best to speak with a business tax accountant now to plan for 2019.