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Standard mileage rate and new business-use vehicle depreciation limits increase for 2018

2018-Ford-F150

2018 Ford F-150

There has been much discussion about the Tax Cut and Jobs Act that was passed by Congress last month and signed into law by President Trump. While many are discussing the expected reduction in tax rates beginning in 2018, here are two changes in the tax laws that you may or may not be aware of:

  • 2018 optional standard mileage rates
  • New vehicle depreciation limits

According to Delores Nance, CPA [Ref 1], the IRS has released the 2018 optional standard mileage rates to be used to calculate the deductible costs of operating an automobile for business, medical, moving and charitable purposes. Beginning on January 1, 2018, the standard mileage rates for the use of a car, van, pickup of panel truck will be:

  • 54.5 cents per mile for business miles driven (up from 53.5 cents in 2017)
  • 18 cents per mile for medical and moving expenses (up from 17 cents in 2017)
  • 14 cents per mile for miles driven for charitable purposes (permanently set by statute at 14 cents).

Nance also shares that under the new Tax Cuts and Jobs Act, the cap placed on depreciation write-offs of business-use vehicles has been raised. The new caps will be:

  • $10,000 for the first year a vehicle is placed in service (up from a current level of $3,160);
  • $16,000 for the second year (up from $5,100); $9,600 for the third year (up from $3,050); and
  • $5,760 for each subsequent year (up from $1,875) until costs are fully recovered.

For passenger autos eligible for bonus first-year depreciation, that maximum first-year bonus depreciation allowance remains at $8,000 (raising the first-year write-off to $18,000). The new, higher limits only apply to vehicles placed in service after December 31, 2017.

You can find additional information about these two laws in Nance’s newsletter, or contact her directly at T: 480-821-4005 and E: nancecpa@msn.com.

Sources cited:

  1. Standard mileage rates increase, while higher depreciation limits kick in, by Delores I Nance, CPA, Newsletters, http://www.nancecpa.com/newsletters.html
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About Vi Brown

Vi is principal and CEO of Prophecy Consulting Group, LLC, an Arizona firm that provides business and engineering services to private and public clients. Prior to establishing her consulting practice in 2001, Vi worked with Motorola, Maricopa County Government, Pacific Gas & Electric, CH2M Hill, and Procter & Gamble. As an adjunct faculty member, Vi teaches undergraduate calculus classes and graduate level environmental courses. She is also a professional speaker.

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