Auto mileage rate for 2013 How to deduct the largest amount on your auto?

Auto mileage rate for 2013  

 How to deduct the largest amount on your auto?


By Jeffrey Brooks, CPA, CFP, MBA for Jbrooks Wealth Advisors, PC, a Professional CPA and CFP Firm  602-292-2009  Please consult with your professional tax CPA regarding your specific circumstances!



A “rule of thumb” is that if your car or vehicle is being used for business over 50% of the time and cost you MORE than $15,000, it is best to use what is called the “actual method”.


The actual method allows you to deduct the business percentage of depreciation, repairs, gasoline, insurance, car washes, auto store products, etc.  If your vehicle weighs over 6000 pounds, you are able to write off the business portion of the purchase price up to $25K in the current year.


There are new rules that allow you to even write off in the current year MORE than $25K!


You always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.


Warning: You may NOT use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.  In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.


The best way to get over 50% business percentage is to drive to a business trip and make your stay close to 100%  business use.


For example, if you drive to S.F. from Phoenix and meet for business purposes on the first workday say Monday,  (Monday through Friday are considered work days) for 4 hours and 1 minute, your weekend days to drive to S.F. will be considered business days.


If you took a day of vacation on Tuesday but worked on Wednesday for 4 hours and 1 minute, you would have  almost obtained your goal of gaining 100% business miles to your business and total mileage calculation.


If you drove back on Thursday morning and arrived back home on Friday evening and you categorized each day as business or personal  you would be able to include  6/7ths (85.7%)  of your driving miles to your business miles.


Saturday-Sunday is business days because Monday is a business day.

Tuesday is a personal day.

Wednesday is a business day so Thursday and Friday travel days are business days.




For example:

Before trip:  your business miles were 5000 and total miles were 11,000 (personal miles of 6,000) so you would be under 50% business use .


After your  trip: Your miles from Phoenix to S.F. is 800 miles each way or 1,600 miles.  85.7%  of these miles are business miles or 1371 miles.  209 miles are personal miles.   Your TOTAL business miles are now 6,371 miles business and 6,209 miles are personal.  The good news is that you can now take advantage of the accelerated depreciation since your business percentage is over 50% business and you can deduct more auto expenses.



But if you fail the 50%+ rule and your vehicle is a lower value vehicle, you can still elect the standard mileage rate as long as you have NEVER used the actual cost method on this car.


Warning: if your home is not your place of business, you MUST pick up commuting miles in the personal mileage column!


Standard Mileage rates for 2013



Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:


56.5 cents per mile for business miles driven

24 cents per mile driven for medical or moving purposes

14 cents per mile driven in service of charitable organizations



The rate for business miles driven during 2013 increases 1 cent from the 2012 rate.  The medical and moving rate is also up 1 cent per mile from the 2012 rate.


The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.




These and other requirements for a you  to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2012-72 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.



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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009