IRS Standard Mileage Reimbursement

Eligible Mileage

Tax rules allow federal income tax deductions for miles driven for business, charitable, medical and moving purposes. Commuting between your home and regular workplace doesn't count as business travel and isn't deductible, although you can deduct the cost of travel from a regular workplace to a second job. The IRS considers commuting as personal travel.

The IRS publishes standard mileage rates for the different types of deductible travel miles. It bases the business rate, which includes fixed costs, on studies of driving costs by an independent contractor. As of Jan. 1, 2011, the standard rates were 51 cents for business travel, 19 cents for medical travel and moving and 14 cents for charitable service. Tax rules offer two methods for drivers to deduct travel expenses: the standard mileage rate or actual expenses.

If you use your car on the job, your employer may reimburse you directly. Whether you need to report those expense payments as income depends on the amount and how the employer handles expense payments. If it's an accountable plan -- meaning you have to account for your expenses -- for deductible travel expenses, not for commuting costs, and the rate per mile isn't more than the standard mileage rate, it doesn't count as taxable wages. In that case, an employer generally doesn't report expense payments on your W-2 or withhold taxes from those payments.

Standard mileage rates for business travel change over time, particularly as gasoline prices fluctuate. For 2010, the standard rate for business mileage was 50 cents. It was 36.5 cents in 2002, and dropped to 36 cents the following year. In 2008, when gasoline prices spiked, the business rate was 50.5 cents for the first six months of the year and jumped to 58.5 cents from July 1 through Dec. 31. It dropped down to 55 cents for 2009. The charitable services rate, set by law, was 14 cents from 2002 through 2011, except for a higher rate allowed for Hurricane Katrina miles in 2006.