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The IRS announced in December 2020 that the standard mileage deduction rate for 2021 would drop from 57.5 cents to 56 cents per mile.
This rate fluctuates up or down most years, typically by no more than a few cents, and has hovered around an average of about 55 cents per mile of the past decade.
A cent-and-a-half difference might not seem like a big deal, but most filers are multiplying this rate by thousands of miles over the course of a year, so those pennies really add up. It’s important to make sure you’re using the right rate depending on the year of the tax return you are filing.
E-file agencies like TaxAct calculate this for you, all you typically need to complete the filing is the number of miles for each category, though putting in your starting and ending odometer readings are a very good idea. Regardless of how little information is needed to complete your tax filing, you will of course want to make sure you’re adhering to proper recordkeeping standards for mileage deductions, which will be crucial in the event of an audit.
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