New Standard Mileage Rates and Transportation Benefit Tax Changes

The 2015 optional standard mileage rate used to calculate the deductible costs of operating an automobile for business purposes is now in effect. Separately, a new law retroactively increases the 2014 monthly benefit exclusion for certain transportation benefits provided to employees.

2015 Standard Mileage Rates

Beginning on January 1, 2015, the standard mileage rate for the use of a car (also vans, pickups or panel trucks) is 57.5 cents per mile for business miles driven. Use of the standard rate is subject to certain requirements and limitations explained in IRS Rev. Proc. 2010-51. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Additional information, including the basis reduction amounts for taxpayers choosing the business standard mileage rate, is available in IRS Notice 2014-79.

Retroactive Increase for 2014 Transportation Fringe Benefits Exclusion

GasPumpFederal law allows the exclusion of employer-provided “qualified transportation fringe benefits” from an employee’s gross income, including transit passes and rides in a commuter highway vehicle between home and work. A new law retroactively increases the 2014 exclusion for combined commuter highway vehicle transportation and transit passes to $250 per month. (Prior to the new law, the exclusion for such benefits was limited to $130 per month.)

The retroactive increase applies until January 1, 2015. Note that the monthly limitation amounts for qualified transportation benefits for taxable years beginning in 2015 are unaffected by the new law and remain the same. Employers should consult a knowledgeable benefits attorney or tax specialist for specific guidance on how the increase applies to 2014 withholding and reporting.

For more on employer-provided transportation benefits, please visit our section on Fringe Benefits.


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