Standard Mileage Rates and Annual Fleet Values Change for 2014

December 9, 2013

Author: Rena Pirsos, XpertHR Legal Editor

The Internal Revenue Service (IRS) has released the 2014 optional standard mileage rates used to calculate the deductible cost of operating a vehicle for business, charitable, and medical or moving purposes and the company fleet maximum valuation amounts. Employers may also use the rates to determine the fair market value of an employee's taxable personal use of an employer-provided vehicle under certain valuation methods.

Beginning January 1, 2014, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

  • 56 cents per mile for all business miles driven (down from 56.5 cents per mile in 2013);
  • 23.5 cents per mile for deductible medical or moving expenses (down from 24 cents per mile in 2013); and
  • 14 cents per mile driven in providing gratuitous services for charitable organizations (this rate is set by law and is unchanged from 2013).

However, employers always have the option of calculating the actual costs of vehicle use rather than using the standard mileage rates.

Under the vehicle cents-per-mile valuation method, an employer can determine the fair market value of an employee's personal use of an employer-provided vehicle by multiplying the business standard mileage rate by the number of personal miles driven by the employee. The result is the value of personal miles that must be taxed.

For cars (not trucks or vans) placed in service in 2014, the valuation method may only be used if the fair market value of the car exceeds $16,000 (unchanged from 2013). The 2014 maximum value for passenger trucks or vans (i.e., minivans and SUVs built on a truck chassis) is $17,300 (up from $17,000 in 2013).

Employers that have a fleet of at least 20 vehicles may use the average fair market value of the vehicles to determine their annual lease value. The fair market value of any of the vehicles in the fleet may not exceed a certain amount on the day the vehicle is first provided to the employee for use. These amounts are adjusted annually for inflation. For 2014, the maximum value is $21,300 for a car (up from $21,200 in 2013) and $22,600 for trucks and vans (up from $22,300 in 2013).