Optional Standard Mileage Rates Updated for 2003 (IR-2002-100, Rev. Proc. 2002-61)

The IRS has updated the optional standard mileage rates for use by employees, self-employed individuals or other taxpayers in computing the deductible costs of operating a passenger automobile for business, charitable, medical, or moving expense purposes. The new rates apply to costs paid or incurred on or after January 1, 2003. The standard mileage rate for transportation expenses is 36 cents per mile for all miles of use for business purposes, down from 36.5 cents per mile in 2002. A standard mileage rate of 14 cents per mile applies for purposes of computing the charitable deduction for use of an automobile in connection with rendering gratuitous services to a charitable organization under Code Sec. 170. The standard mileage rate for use of an automobile to obtain medical care described in Code Sec. 213 or as part of a move with respect to which the expenses are deductible under Code Sec. 217 is 12 cents per mile, down from 13 cents per mile in 2002.

Also provided are rules for substantiating ordinary and necessary expenses incurred by an employee for local travel or transportation away from home where these costs are reimbursed by an employer or other third party. Use of a method of substantiation described in this procedure is not mandatory, and taxpayers who maintain adequate records or other sufficient evidence may use their actual allowable expenses when claiming deductions.

Rev Proc. 2001-54, I.R.B. 2001-48, 530, is superseded for mileage allowances that are paid both (1) to an employee on or after January 1, 2003, and (2) with respect to transportational expenses paid or incurred by the employee on or after January 1, 2003. Also, Rev. Proc. 2001-54 is superseded for purposes of computing allowable deductions for transportation expense paid or incurred on or after January 1, 2003.