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IRS Announces 2020 Mileage Rates and other 2020 Tax Figures

Prior to each calendar year, the IRS announces mileage rates for business use of personally-owned vehicles, as well as inflation-adjusted amounts for a whole host of items. Here is a summary of the most common items.

2020 Mileage Rates

At the end of December, the IRS issued the 2020 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable or medical purposes. 
Beginning January 1, 2020, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:
  •  57.5 cents per mile driven for business use, down a half-penny from the 2019 rate;
  • 17 cents per mile driven for medical or moving purposes, down 3 cents from the 2019 rate;
  • 14 cents per mile driven in service of charitable organizations (no change from 2019).
Many employers adopt the IRS business rate (or some portion) for reimbursing employees who use their vehicles for company purposes. So HR and payroll specialists will need to modify their policies and record keeping to account for the increased rate starting after the New Year.

Other Tax Figures for 2020:

In addition to mileage, the IRS has issued inflation-adjusted amounts for many items effective in 2020, including:
  • Maximum amount to add to a Health Flexible Spending Account (FSA) - $2,750
  • Maximum amount to add to a Health Savings Account (HSA) - $3,550 for self-only and $7,100 for families. The age-55 catch-up amount remains at $1,000.
  • Maximum amount to an IRA (Traditional and ROTH) remains unchanged at $6,000, as well as the age-50 catch up of $1,000
  • The limit on salary deferrals to a 401k plan increases to $19,500. The age-50 catch-up increases to $6,500.
  • The limit on salary deferrals to a Simple IRA increases to $13,500. The age-50 catch-up remains at $3,000.
  • FICA wage limit for the 6.2% Social Security tax on wages tops out at $137,700 for 2020. The maximum Social Security tax to be paid by employees and employers will be $8,537.40 each.
There are dozens of other inflation-adjusted figures for 2020, but these are the ones we hear about the most. If you need any additional information on other figures, please give us a call.

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