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The IRS releases the mileage reimbursement rates for 2016

Dec 18Jeff Matthews
Mileage reimbursement rates

Just released from the IRS the 2016 mileage reimbursement rates, the optional standard mileage reimbursement will be $0.54 per mile in 2016, down from $0.575 per mile in 2015.

Medical and moving reimbursement rates dropped by four cents in 2016 to $0.19 per mile.  Rates applicable for rendering gratuitous services to a charitable organization will remain unchanged at $0.14 per mile.

The IRS employee a national firm to study fuel and operating costs across the country when setting these rates.  The reimbursement rate is covers more than just fuel.  Repairs, tires, depreciation, insurance and assumptions about driving levels also are factored into the rates.

Notice 2016-1 from IRS.gov provided guidance on the standard automotive cost reimbursements that can be used under a fixed and variable plan.  A number of companies use these plans in lieu of providing a company vehicle or simply reimbursing at the flat rate.  Under a fixed and variable plan, the driver receives a flat amount every month intended to reimburse for insurance and other non-variable costs.  The variable component is reimbursed based upon mileage for fuel, depreciation, repairs, etc.  I have utilized this type of plan in the past and each driver’s fixed and variable rates were set based upon their location, anticipated driving area and vehicle.

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