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CURRENT GAS PRICES
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Gas Prices Prompt IRS To Raise Mileage Rate

Businesses, Others To Get Bigger Tax Write-Off

POSTED: 6:53 am MDT June 24, 2008
UPDATED: 8:58 am MDT June 24, 2008

The Internal Revenue Service is raising the automobile mileage rate that businesses and others can claim.

The IRS said the optional standard rate to calculate deductible operating costs for business vehicles will go from 50.5 cents a mile to 58.5 cents for the last six months of this year.

The agency said the drain that high gas prices are having on people's finances is behind the change.

"Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile," said IRS Commissioner Doug Shulman. "We want the reimbursement rate to be fair to taxpayers."

The IRS said that while gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The tax agency said the rate for computing deductible medical or moving expenses is also changing, getting bumped from 19 cents to 27 cents a mile for the final six months of the year.

Congress must enact legislation to change the rate for providing services for charitable organizations, so that will stay at 14 cents a mile.

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