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2013 Small Business IRS Mileage Rates

Written by Ken Gaebler
Published: 1/3/2013

Internal Revenue Service releases 2013 Mileage Deduction Rates as entrepreneurs attempt to minimize their tax burdens in the new year.

Successful small business owners invest time and effort in cost management strategies. Although it's impossible to avoid the IRS completely, there are several strategies entrepreneurs can implement to minimize the amount of tax they pay -- including travel and mileage expense deductions.

2013 Small Business IRS Mileage Rates

Each year the IRS releases a revised mileage rate, allowing business owners to deduct a specified amount per mile for business travel in personal vehicles. In turn, business owners typically reimburse employees using the IRS Mileage Deduction Rate. As usual, the 2013 mileage rates rose slightly from the deduction rates that were in effect in 2012.

"Business owners often can't decide whether to use the mileage rate deductions or have their car owned by their company. There are a number of disadvantages to having a company car, but there are also disadvantages to having a personal car used for company business. It's a touchy subject. The easiest thing to do is just use the mileage rate deductions in a personal car," said attorney Lee R. Phillips.

IRS 2013 Mileage Deduction Rates for 2013

  • Business travel: 56.5 cents per mile
  • Medical or moving travel: 24 cents per mile
  • Charitable service travel: 14 cents per mile

It's important for business owners to understand that special conditions may apply to mileage tax deductions. For example, a taxpayer is not allowed to claim the business standard mileage rate on a vehicle that has been depreciated or after a Section 179 deduction has been applied to the vehicle.

Also, business taxpayers have the option of foregoing IRS mileage rates and calculating the actual cost of using their vehicles for business purpose. Few businesses rely on this option due to the time and hassle it takes to track fuel, maintenance and other expenses.

However, by tracking total business miles, business owners can achieve meaningful reductions in taxable income. "By planning and being organized, a small business person can save some taxes. For example, assuming there were 10,000 miles traveled for business, the tax write-off would be $5,650 using the 2013 mileage rate. That lowers the individual's adjusted gross income by that much, which could drop them below a critical tax threshold," said Phillips.

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