As you get read to embark on 2017, one of the things to keep in mind is the IRS. Why you may ask? Well the IRS likes to ring in the New Year with all sorts of changes (don’t believe us? Check out this blog).
One of their newest additions is the change in rate for mileage. Beginning on January 1, 2017, the standard mileage rates for business, medical and moving will change. Happy New Year.
The new rates will be:
- 53.5 cents for business mileage (that’s a whopping half cent change from 54 cents in 2016)
- 17 cents for medical or moving purposes (it was 19 cents in 2016)
Why the change? As a reminder, the mileage rates for business are based on a fancy study on the fixed and variable costs of operating an automobile. So the IRS is just keeping up with the times.
These are important calculations to watch if you’re reimbursing your employees for driving on or for the job. While half a cent might not seem like much, it can add up if you’re not paying attention to these types of changes. Anything paid to an employee above the federal mileage rate becomes taxable wages to the employee.
Don’t feel like calculating the mileage rates? You can always calculate the actual cost of using a vehicle instead.