Commuting is one of those necessary evils that many workers must endure. Commuting expenses can take a big chunk out of an employee’s take-home pay, but it's part of the cost of having a job.
TL;DR (Too Long; Didn't Read)
Commuting expenses are not deductible, though certain business-related travel may be deductible.
You can’t deduct commuting expenses per se. Those are expenses involved in just getting from your home to your place of employment. However, if your employer doesn’t reimburse you for the use of your car spent on business travel, not commuting, you can deduct that amount using either the standard mileage rate or the actual expenses method. The latter includes claiming the cost of gas, oil, insurance, tires, repairs, licenses, registration and the like as a percentage of all business-related miles. Careful recordkeeping is necessary to claim this deduction, but as noted, it does not refer to commuting itself.
Commuting Expenses Exceptions
There are exceptions to the lack of a commuting tax deduction. If your primary place of business is your home, and that doesn’t mean a weekly work from home day in lieu of reporting to an office, you can deduct travel to other places in which you are doing business.
If you have more than one job, you can deduct the expenses of traveling from one job to the other but not the expenses of commuting from home and back again from either job site. If your employer sends you on a temporary work assignment away from your designated metropolitan area, you can deduct the travel expenses from your home to this temporary assignment.
IRS Commuting Rule 2018
The Tax Cuts and Jobs Act, signed into law by President Trump on December 22, 2017, eliminates the use of employer fringe benefits for transportation for tax year 2018 until the TCJA is set to expire at the end of 2025. The only exception to this rule for employers is transportation provided to ensure their employee’s safety, such as ordering a car service. For 2018, the standard mileage rate is 54.5 cents per mile for unreimbursed, deductible expenses.
IRS Commuting Rule 2017
In 2017, the IRS allowed employees taking advantage of eligible mass transit to use pretax dollars for up to $255 monthly in transportation expenses. Parking expenses were also allowed for up to $255 per month, with businesses taking these deductions. These monies are excluded from the employee’s gross income. Those who biked to work could use up to $20 monthly. The standard mileage rate for 2017 is 53.5 cents per mile for unreimbursed, deductible expenses.
- IRS: Publication 463 (2017), Travel, Entertainment, Gift, and Car Expenses
- Society for Human Resource Management: What Happens After Tax Law Scuttles Employers' Deduction for Commuting Benefits?
- TaxAct: How to Claim Mileage Deductions and Business Car Expenses in 2017
- IRS: Publication 529 (2017), Miscellaneous Deductions
- IRS: Standard Mileage Rates for 2018 Up from Rates for 2017
- MarketWatch: Biking to Work This Spring? It Just Got More Expensive Under the New Tax Law
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.