Standard Mileage Rates, Annual Fleet Values Change for 2015

December 17, 2014

Author: Rena Pirsos, XpertHR Legal Editor

The IRS has released the 2015 optional standard mileage rates employers may use to calculate the deductible cost of operating a vehicle for business, charitable and medical or moving purposes. 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.

For travel occurring on or after January 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck are:

  • 57.5 cents per mile for all business miles driven (up from 56 cents per mile in 2014);
  • 23 cents per mile for deductible medical or moving expenses (down from 23.5 cents per mile in 2014); and
  • 14 cents per mile driven in providing gratuitous services for charitable organizations (this rate is set by law and is unchanged from 2014).

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 2015, the valuation method may only be used if the fair market value of the car does not exceed $16,000 (unchanged from 2014). The 2015 maximum value for passenger trucks or vans (i.e., minivans and SUVs built on a truck chassis) is $17,500 (up from $17,300 in 2014).

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 2015, the maximum value is $21,300 for a car (unchanged from 2014) and $22,900 for trucks and vans (up from $22,600 in 2014). An employer may not use the fleet-average valuation rule if any of the vehicles in the employer's fleet exceed its maximum allowable value.

In addition, for purposes of computing the allowance under a fixed and variable rate (FAVR) plan, the 2015 standard automobile cost may not exceed $28,200 for automobiles (excluding trucks and vans) or $30,800 for trucks and vans.