Line items

2018 standard mileage rates

The optional standard mileage rates for business use of a vehicle increased slightly for 2018, after decreasing in the two previous years (Notice 2018-3). For business use of a car, van, pickup truck, or panel truck, the rate for 2018 is 54.5 cents per mile, up from 53.5 cents per mile in 2017. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.

Driving for medical or moving purposes may be deducted at 18 cents per mile, which is likewise one cent higher than for 2017. (However, under amendments by the so-called Tax Cuts and Jobs Act, P.L. 115-97, the moving expense deduction is repealed for tax years 2018 through 2025, except for members of the armed forces on active duty who move pursuant to a military order and incident to a permanent change of station.)

The rate for service to a charitable organization is unchanged, set by statute at 14 cents per mile (Sec. 170(i)).

The portion of the business standard mileage rate that is treated as depreciation is 25 cents per mile for 2018, unchanged from 2017.

To compute the allowance under a fixed and variable rate (FAVR) plan, the maximum standard automobile cost is $27,300 for 2018 (down from $27,900 for 2017) for automobiles (not including trucks and vans) and $31,000 for trucks and vans (a decrease of $300 from 2017). 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.

IRS modifies individual mandate affordability exemption where no bronze plan is available

Noting that "market instability" resulted in limited offerings in some regions of health plans by marketplaces under the Patient Protection and Affordable Care Act, P.L. 111-148, the IRS in Notice 2017-74 provided guidance on computing the affordability exemption from the individual mandate under Sec. 5000A(e)(1) for taxpayers and/or their family members who reside in an area where a marketplace does not offer a bronze-level plan. To determine eligibility for the affordability exception in such instances, individuals may use as the applicable plan the lowest cost metal-level plan available, the IRS provided.

The individual mandate generally requires nonexempt individuals to either maintain minimum essential coverage for each month or pay a "shared responsibility" penalty with their tax returns.

Sec. 5000A(e)(1) provides an exception from the individual mandate for individuals whose required contribution for minimum essential coverage exceeds a percentage (8.16% for 2017) of the individual's household income for the tax year. The required contribution, for individuals ineligible to purchase coverage under an eligible employer-sponsored plan, is the annual premium for the applicable plan (generally, the lowest-cost bronze plan available through the marketplace), reduced by any premium tax credit allowable under Sec. 36B.

The guidance is effective for tax years ending after Dec. 31, 2016. However, for months beginning after Dec. 31, 2018, last year's tax overhaul bill, P.L. 115-97, effectively repeals the individual mandate by setting the shared-responsibility payment to zero.

Where to find October’s flipbook issue

The Journal of Accountancy is now completely digital. 





2022 Payroll Update

Employees working remotely have created numerous issues for employers. The 2022 Payroll Update report provides insight on remote workforce tax issues, pandemic payroll issues and employer credits, and worker classification issues in the gig economy.