Rather than keeping track of the real cost of operating a vehicle, regular employees and self-employed taxpayers can use a standard mileage rate to calculate their deduction for using a vehicle for business. But you may also be able to deduct miles driven for additional purposes, such as medical, charitable, and moving purposes.
What are the Gas Mileage Deduction Rates?
The rates vary depending on the purpose and the tax year, but here are the deduction rates for 2016 and 2017:
  • Business: 54 cents (2016), 53.5 cents (2017)
  • Medical: 19 cents (2016), 17 cents (2017)
  • Moving: 19 cents (2016), 17 cents (2017)
  • Charitable: 14 cents (2016 and 2017)
The standard business mileage rate is significantly higher than the medical, moving and charitable rates because no depreciation is allowed for the medical, moving or charitable use of a vehicle.
In addition to deductions based on the standard mileage rate, you may deduct parking fees and tolls.
What Other Limits Apply?
The rules surrounding mileage deductions are complex. Some deductions are subject to floors, and some require you to meet specific tests to qualify.
For instance, miles driven for healthcare-related purposes are deductible as part of the medical expense deduction. But medical expenses are deductible only to the extent they exceed 10% of your adjusted gross income. (For 2016, the medical deduction threshold is 7.5% for qualifying seniors.)
And while miles driven related to moving are deductible, the move must be work-related. Also, the distance from your old residence to your new job must be at least 50 miles more than the distance from your old residence to your old job.
Further Considerations
There are also substantiation requirements, which include tracking miles driven. And it may be more advantageous to deduct actual expenses rather than using mileage rates.
Contact your advisor to help ensure you correctly deduct all the mileage you’re entitled to on your 2016 tax return because you do not want to risk back taxes and penalties later.
And if you think you drove potentially eligible miles in 2016 but cannot deduct them because you did not track them, start tracking your miles now so you can take advantage of this deduction later when you file your 2017 return next year.