SmallBizResource Blog -- Business Know-How

IRS Increases Mileage Rate Again

Posted by Janet Attard, Courtesy of Business Know-How Friday, Jun 27, 2008, 09:45 AM ET

In recognition of the skyrocketing cost of gasoline, the Internal Revenue Service has increased optional standard mileage rates for the last six months of 2008.

The 8-cent increase, from 50.5 cents to 58.5 cents, goes into effect July 1.

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.

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.

At the same time, the IRS has also issued new mileage rates for the second half of the year for individuals who compute medical or moving expenses. That rate goes up to 27 cents a mile. The rate for mileage driven for charitable services, however, remains unchanged at 14 cents a mile.

Of course, taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

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