IRS TAX TIPS: Vehicle Tax Deduction (ASL, Captions & Audio)

WASHINGTON — On December 9, 2011 the IRS (Internal Revenue Service) issued the guidelines for 2012 including the optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

These guidelines will begin on January 1, 2012. This means that the old guidelines used in 2011 will no longer be applicable. The standard mileage rates in effect for 2012 to be applied for the use of a car (also vans, pickups or panel trucks) will be:

55.5 cents per mile for business miles driven
23 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

It should be noted that taxpayers will always have the option of calculating the actual costs of using their vehicle in the place of using the standard mileage rates.

There are some restrictions; no taxpayer may use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.

Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

You should always check with your tax professional prior to taking these or any deductions. The information provided in “IRS TAX TIPS: Vehicle Tax Deduction” should not be used in place of advice from a certified tax professional.

For more information, go to

Vehicle Tax Deduction – Public Service Announcement from IRS, courtesy of the NAD.

Duration : 0:0:56

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