The IRS just released final 2016 standard mileage rates for cars, vans, pickups and panel trucks late last week. The 2015 rate was 57.5 cents per mile and during our tax class in Des Moines last week, David Repp and I were betting how much the 2016 rate would decrease by. I thought it would be at least a nickel and I was wrong. The actual 2016 standard mileage rate came in at 54 cents per mile which is a 3.5 cent drop. The rate for medical miles actually dropped 4 cents from 23 cents to 19 cents per mile.
I had just read that the average price of gasoline is now slightly less than $2 per gallon which is about a $1 lower than last year at this time. If the average car gets about 25 miles per gallon this would equate to about 4 cents per gallon which is equal to the drop in the rate. This means that of the total 54 center per mile, gasoline makes up less than 10 cents of the overall total.
The charitable rate remains unchanged from the prior year since it is set by law. The portion of the standard mileage rate treated as depreciation is 24 cents per mile for both 2015 and 2016.