Notice 2021-02 provides the optional 2021 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. It provides the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate (FAVR) plan. This notice also provides the maximum fair market value (FMV) of employer-provided automobiles first made available to employees for personal use in calendar year 2021 for which employers may use the fleet-average valuation rule in § 1.61-21(d)(5)(v) - Automobile lease valuation rule or the vehicle cents-per-mile valuation rule in § 1.61-21(e) - Vehicle cents-per-mile valuation rule.
STANDARD MILEAGE RATES
The standard mileage rate for transportation or travel expenses is 56 cents per mile for all miles of business use (business standard mileage rate). The TCJA suspends all miscellaneous itemized deductions that are subject to the two-percent of adjusted gross income floor under § 67 - 2-percent floor on miscellaneous itemized deductions, including unreimbursed employee travel expenses, for taxable years beginning after December 31, 2017 and before January 1, 2026, so the business standard mileage rate provided in this notice cannot be used to claim an itemized deduction for unreimbursed employee travel expenses during the suspension. Deductions for expenses that are deductible in determining adjusted gross income are not suspended. Members of a reserve component of the Armed Forces, state or local government officials paid on a fee basis, and certain performing artists are entitled to deduct unreimbursed employee travel expenses as an adjustment to total income on line 11 of Schedule 1 of Form 1040 (2020), not as an itemized deduction on Schedule A of Form 1040 (2020), and may continue to use the business standard mileage rate.
The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization under § 170 - Charitable, etc., contributions and gifts.
The standard mileage rate is 16 cents per mile for use of an automobile:
(1) For medical care described in § 213 - Medical, dental, etc., expenses or
(2) As part of a move for which the expenses are deductible under § 217(g) - Rules For Members Of The Armed Forces Of The United States.
The TCJA suspends the deduction for moving expenses for tax years beginning after December 31, 2017 and before January 1, 2026. The suspension does not apply to members of the Armed Forces on active duty who move pursuant to a military order and incident to a permanent change of station. Except for taxpayers to whom § 217(g) applies, the standard mileage rate provided in this notice is not applicable for the use of an automobile as part of a move occurring during the suspension.
BASIS REDUCTION AMOUNT
For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 25 cents per mile for 2017, 25 cents per mile for 2018, 26 cents per mile for 2019, 27 cents per mile for 2020, and 26 cents per mile for 2021.
MAXIMUM STANDARD AUTOMOBILE COST
For purposes of computing the allowance under a FAVR plan, the standard automobile cost may not exceed $51,100 for automobiles (including trucks and vans).
MAXIMUM VALUE OF EMPLOYER-PROVIDED AUTOMOBILES
For purposes of the fleet-average valuation rule in § 1.61-21(d)(5)(v) and the vehicle cents-per-mile valuation rule in § 1.61-21(e), the maximum FMV of automobiles (including trucks and vans) first made available to employees in calendar year 2021 is $51,100.
For full text see IRB: 2021-3, 1/19/2021