On May 25, 2018, the IRS released Notice 2018-42 which provides information to taxpayers and employers about changes from the Tax Cuts and Jobs Act which impact move related vehicle expenses, un-reimbursed employee expenses and vehicle expensing.
The Tax Cuts and Jobs Act suspended the deduction for moving expenses for tax years beginning after December 31, 2017 and ending before January 1, 2026. Therefore, no deduction is allowed for use of an automobile as part of a move using the mileage rate listed in Notice 2018-03 released prior to the Tax Cuts and Jobs Act. This suspension does not apply to members of the Armed Forces of the United States on active duty who move pursuant to a military order related to a permanent change of station.
The Tax Cuts and Jobs Act suspended all miscellaneous itemized deductions that are subject to the 2% of adjusted gross income floor. This change affects un-reimbursed employee expenses such as uniforms, union dues and the deduction for employee travel expenses such as business-related meals, entertainment and travel costs. The suspension is for tax years beginning after December 31, 2017 and ending before January 1, 2026.
As stated in Notice 2018-03, the standard mileage rates for the use of a car, van, pickup or panel truck for 2018 remain as follows:
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
The Tax Cuts and Jobs Act increased the depreciation limitations for passenger automobiles placed in service after December 31, 2017, for purposes of computing the allowance under a fixed and variable rate plan. The maximum standard automobile cost may not exceed $50,000 for passenger automobiles, trucks and vans placed in service after Dec. 31, 2017. Previously, the maximum standard automobile cost was $27,300 for passenger automobiles and $31,000 for trucks and vans.
Read More: Mileage Reimbursement Guide for Employers