Effective Jan. 1, 2020, the standard mileage rates for the use of a car (including vans, pickups, and panel trucks) are:
- 57.5¢ per mile for business miles driven (58¢ per mile in 2019);
- 17¢ per mile for medical or moving purposes (20¢ per mile in 2019); and
- 14¢ per mile for service to a charitable organization (same rate as in 2008-2019) [IR 2019-215; Notice 2020-5].
An employer may use the business mileage rates above to reimburse an employee for business use of a personal vehicle, and, under certain conditions, to value the personal use of a vehicle that the employer provides to the employee, and the reimbursement will be treated as a tax-free accountable plan reimbursement if the employee substantiates the time, place, business purpose, and mileage on each trip.
The standard mileage rates for business use are based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs. The charitable mileage rate is set by law. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
FAVR allowance. An employer may also reimburse employee car and truck expenses with a mileage allowance that is called a “FAVR allowance,” using a flat rate or stated schedule that combines periodic fixed and variable rate payments (see Payroll Guide ¶ 3806). The FAVR allowance must be based on the cost of a standard automobile selected by the employer. The cost of that standard automobile may not exceed 95% of the automobile’s retail price, plus state and local taxes, nor may the cost in 2020 exceed $50,400 for automobiles, including trucks and vans (also $50,400 in 2019).
Maximum fair market value for the vehicle cents-per-mile or fleet-average valuation rules. The maximum value of an employer-provided vehicle (including trucks and vans) first made available to employees for personal use in calendar year 2020 for which either the vehicle cents-per-mile valuation rule or fleet-average valuation rule may be used is $50,400 (also $50,400 in 2019).