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IRS Announces 2021 Mileage Rates

Church leaders can track and report mileage for proper reimbursement.

IRS Announces 2021 Mileage Rates
Image: Feifei Cui-Paoluzzo | Getty

The Internal Revenue Service (IRS) has announced the new standard mileage rates for 2021. Starting on January 1, 2021, the standard mileage rates for the use of a car, van, pickup, or panel truck will be:

  • 56 cents per mile driven for business use, down 1.5 cents from the 2020 rate
  • 16 cents per mile driven for medical or moving purposes, down 1 cent from the 2020 rate
  • 14 cents per mile driven in service of charitable organizations

“The standard mileage rate for business use is 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 IRS noted in a press release. “It is important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Taxpayers also cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station.”

Church employees who drive their personal vehicles for church-related business (visitations, special events, etc.) can be reimbursed by the church, if they properly track their business miles. Since unreimbursed employee business expenses are currently not deductible, employees can no longer calculate a mileage deduction on their annual tax returns. Current law allows for a reinstatement of the deduction for unreimbursed employee business expenses in the year 2026.

For more on reimbursements of transportation expenses and other key tax changes that affect you and your ministry, order the Church & Clergy Tax Guide today.

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Posted:
  • January 6, 2021

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