The IRS has published the reference amounts for mileage rates for 2021. The rates:
Beginning on January 1, 2021, the standard mileage rates for the use of a vehicle will be:
- 56.0 cents per mile driven for business use, down 1.5 cents from the rate for 2020,
- 16 cents per mile driven for medical or moving purposes, down 1 cent from the rate for 2020, and
- 14 cents per mile driven in service of charitable organizations.
The business mileage rate decreased one and a half cents for business travel driven and one cent for medical and certain moving expense from the rates for 2020. The charitable rate is set by statute and remains unchanged.
The business rate is down from 57.5 cents in 2020 and 58.0 cents in 2019, which in turn was up from 54.5 in 2018.
The standard rate for business is based on their analysis of the fixed and variable costs of operating a vehicle. The medical & moving rate is based on variable costs of operation.
Rates were published in Notice 2021-02: 2021 Standard Mileage Rates.
What if a non-profit choses to reimburse volunteers at the business rate of .56, rather than the charitable organization rate of .14?
Hi Sara:
The difference (.56 – .14 = .42) would be taxable income.
Jim
What would the milage rate be for a volunteer firefighter is it the .14c per mile as a deduction on taxes or the .56 as a job would be?
Hi Keith:
For mileage as volunteer, the rate would be $0.14 per mile.
Jim
For employees of a non-profit is the
14 cents accurate
Hi Rhonda:
The $0.14 rate is for volunteers helping a charity. If a person is employed by the charity, then the business rate of $0.56 per mile would be the upper limit of mileage reimbursement without generating a taxable transaction.
Jim
Hi,
My non-profit business is located in California, but I have employees in New Jersey.
Does the California law apply to them?
Thanks.
Hi Linda:
Those are federal rates for use in filing federal tax returns. I have no idea what New Jersey law says about mileage rates.
Jim
Can businesses set lower rates than the IRS rate? Are there any guidelines for how this might be done?
Hi Lenna:
Sure. The reimbursement rate is a policy decision. Just decide what rate you wish to reimburse use of personal vehicles. If the rate chosen is above the IRS amount the difference is taxable.
The federal rate is used as a reference point for many organizations (I’ll guess most) as a matter of convenience. It isn’t taxable, it is objectively determined outside the organization, and there is a study behind the rate which tries to determine an actual cost so it is a supportable number conceptually.
Choose the reimbursement rate you wish.
Jim
Is this also the rate for a non-profit that is not a charity? For example a 501(c)(7) social organization?
Yes