Business Standard Mileage Rate Decreases to 56 Cents in 2021
The IRS announced that the business standard mileage rate for transportation expenses paid or incurred beginning January 1, 2021, will be 56 cents per mile, down 1.5 cents from 2020 [Notice 2021-02, 12-22-20].
In addition, the 2021 standard rate for miles driven for medical or moving purposes will decrease to 16 cents per mile, down from the 17 cents-per-mile rate in effect during 2020.
The standard mileage rate for operating a passenger car for charitable purposes, which is set by law, will stay at 14 cents per mile in 2021.
Vehicles Put Into Service in 2021
For vehicles put into service in 2021, the cents-per-mile valuation method can be used only if the vehicle does not have a fair market value of more than $51,100 ($50,400 in 2020). For employer-provided vehicles under the fleet-average valuation rule, applicable to an employer with a fleet of 20 or more automobiles, the 2021 maximum value is $51,100 for an automobile ($50,400 in 2020). Note: The fleet-average valuation rule may not be used if any of the automobiles in the employer's fleet exceeds its maximum allowable value.
To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!
Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Payroll Information Resources for the APA.