IRS Notice 2016-79 (Dec.13, 2016); IRS News Release IR-2016-169 (Dec. 13, 2016)
The IRS has announced that the standard mileage rate for use of an automobile to obtain medical care—which may be deductible under Code § 213 if it is primarily for, and essential to, the medical care—will be 17 cents per mile for 2017. This is a 2 cent decrease from the rate of 19 cents per mile that was in effect for 2016 (see our Checkpoint article). The same lower rate will apply for deducting automobile expenses that are moving expenses under Code § 217.
Use of the standard mileage rate is not mandatory, but it can be used instead of calculating variable expenses (e.g., gas and oil) that are incurred when a car is used to obtain medical care or as part of a move. Parking fees and tolls related to use of an automobile for medical or moving expense purposes may be deductible as separate items. Fixed costs (e.g., depreciation, lease payments, insurance, and license and registration fees) are not deductible for these purposes and are not reflected in the standard mileage rate for medical care and moving expenses. These and other details about using the standard mileage rate can be found in Revenue Procedure 2010-51.
EBIA Comment: Transportation expenses that are deductible medical expenses under Code § 213 generally can be reimbursed on a tax-free basis by a health FSA, HRA, or HSA. (To simplify administration, some employers’ health FSAs or HRAs exclude medical transportation expenses from the list of reimbursable items.) The applicable reimbursement rate will be the one in effect when the expense was incurred. Note that the standard mileage rate for medical care and moving expenses differs from the business standard mileage rate, which is 53.5 cents per mile for 2017 (down from 54 cents per mile for 2016). For an explanation of the difference between the two rates, see our Checkpoint article. For more information, see EBIA’s Cafeteria Plans manual at Sections XX.L.8.b (“Mileage Rate for Traveling to Obtain Medical Care”) and XX.M (“Table of Common Expenses, Showing Whether They Are for ‘Medical Care’”). See also EBIA’s Consumer-Driven Health Care manual at Sections XV.C (“What Is an HSA-Qualified Medical Expense?”) and XXIV.B (“HRAs May Reimburse Only Code § 213(d) Expenses”), and EBIA’s Fringe Benefits manual at Section XVII.D.1.b (“Moving Expenses: Travel by Car”).
Contributing Editors: EBIA Staff.