The Internal Revenue Service has announced that the “standard mileage” rate available for the business use of eligible vehicles will decrease to $0.56 (56.0 cents) per mile. This rate is effective for costs paid or incurred on or after January 1, 2021.
Generally, employers are free to establish any reasonable mileage reimbursement policy for properly documented business miles. The standard mileage rate is the maximum amount that an employer can reimburse an employee without the reimbursement resulting in taxable income.
The new standard mileage rate may also be used by self-employed individuals for determining the cost of operating their vehicle for business purposes.