Low inflation contributed to a five cents drop in the standard business mileage reimbursement rate for 2010. Effective January 1, 2010, the standard business mileage rate will be 50 cents-per-mile, which is a drop from 55- cents-per-mile in 2009. The standard mileage rate for moving costs and medical expenses will also decline in 2010. The only mileage rate remaining the same is the rate for the charitable deduction, which is set by statute.

Mileage rates The business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of the extra burden of tracking actual costs. The business standard mileage rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

As of January 1, 2010, the following mileage rates will be available for use by taxpayers:

• 50 cents per mile for business miles driven
• 16.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The depreciation component for the business mileage rate will be 23 cents-per-mile for 2010, which is an increase from 21 cents-per-mile in 2009.

Limitations

The business standard mileage rate cannot be used to compute the deductible expenses of automobiles used for hire or five or more automobiles owned or leased by a taxpayer and used simultaneously. The business standard mileage rate also cannot be used in the case of an automobile that is leased by the taxpayer, unless he or she uses either the business standard mileage rate or the variable rate allowance (FAVR allowance) to compute the deductible business expenses of an automobile for the entire lease period (including renewals).