January 5, 2021
Federal mileage rates decrease in 2021, luxury vehicle limit is increased
Effective January 1, 2021, the business standard mileage rate for use of a car (including vans, pickup trucks, and panel trucks) decreases from $0.575 to $0.560 and the rate for medical and relocation mileage decreases from $0.17 to $0.16. Mileage related to charity is set by law and remains at $0.14 per mile. (Notice 2021-02.)
It is important to note that under the Tax Cuts and Jobs Act (TCJA) and effective after December 31, 2017, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Also, under the TCJA, taxpayers, except members of the Armed Forces on active duty who are ordered to a permanent change of station, cannot claim a deduction for moving expenses and employees may not exclude employer reimbursements of these expenses from income.
For the rates and limits applicable in 2020, see our special report.
Luxury vehicle limitation for 2021
Pursuant to the vehicle valuation limit that applies to use of the optional fleet-average and vehicle cents-per-mile valuation methods, and for computing the allowance under a fixed and variable rate allowance (FAVR) plan, the maximum fair market value of the vehicle (including trucks and vans) first made available to employees in calendar year 2021 is $51,100, an increase from the 2020 limit of $50,400.
Summary of mileage rates — 2021 compared to 2020
EY Payroll News Flash