The IRS has provided information to taxpayers about changes in the use of standard mileage rates and increased depreciation limits for passenger automobiles because of the Tax Cuts and Jobs Act.  The IRS modified the optional 2018 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes.

Because the miscellaneous itemized deduction for unreimbursed employee business expenses from 2018 to 2025 have been suspended, the standard mileage rate will not apply to those expenses during that period.

The moving expense rate for 2018 is 18 cents per mile. The moving expense deduction only applies to U.S. armed forces members on active duty who move pursuant to a military order and incident to a permanent change of station.

The final change is to the depreciation allowances permitted pre- and post-TCJA. Under pre-TCJA law, under a fixed-and-variable-rate (FAVR) plan, the maximum standard automobile cost was $27,300 for 2018 for automobiles (not including trucks and vans) and $31,000 for trucks and vans. (Under a FAVR plan, a standard amount is deemed substantiated for an employer’s reimbursement to employees for expenses they incur in driving their vehicle in performing services as an employee for the employer.)  The depreciation limits for passenger automobiles placed in service after Dec. 31, 2017 has been increased. The maximum standard automobile cost is raised to $50,000 for passenger automobiles, (including trucks and vans) placed in service after Dec. 31, 2017. This increase is permanent.

Contact us at 727-290-9652 or with any questions related to how this may affect you next filing season.

David M. Snyder, CPA

The Tax Axe, LLC

September 2018