2016 IRS Mileage Rate: 54 Cents Per Mile

The IRS mileage rate for business was set at 54 cents per mile for tax year 2016. This is the approved rate for an optional deduction for mileage, in lieu of calculating actual expenses. The 2015 mileage rate was 57.5 cents per mile.

I'm pretty surprised that there wasn't a larger drop considering the steep drop in gasoline prices from 2014 to 2015. The average price per gallon of gas across the USA has been $2.45 this year, a 27% decline in the average price of $3.36 per gallon in 2014.

The reason is that the deduction is not just for gasoline. According to the IRS, "the standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile."

The mileage rate for medical travel and moving is set at 19 cents per mile (vs. 23), and 14 cents per mile in the service of charitable organizations (501(c)(3)).

The lower cost of fuel means that Americans are driving more and driving further - about 275 billion miles in the most of October, about 3% more than the prior year: