
On December 22, 2020, the Internal Revenue Service (IRS) issued the 2021 optional standard mileage rates, which are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on January 1, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020;
- 16 cents per mile driven for medical purposes, or moving purposes for qualified active-duty members of the Armed Forces, down one cent from the rate for 2020; and
- 14 cents per mile driven in service of charitable organizations. This rate is set by statute and remains unchanged from 2020.
The notice also provides that:
- The maximum standard automobile cost to compute the allowance under a fixed and variable rate plan (FAVR plan) may not exceed $51,100 for automobiles (including trucks and vans); and
- The maximum fair market value of employer-provided automobiles for the fleet-average valuation rule and the vehicle cents-per-mile valuation rule (including trucks and vans) first made available to employees in calendar year 2021 is $51,100.