IRS increases standard mileage rate

This should come as a relief to all those road warriors out there. Considering the current costs of fuel, the IRS has increased the standard mileage rate for deductible business miles from 50.5 cents to 58.5 cents per mile. For those of you that have hesitated keeping a log of your miles because it's a pain in the ass, you should definitely reconsider now!

For example, if you drove 10,000 business miles this year, you would have an additional deduction of $5850 - 5,000 miles is $2925. These are significant deductions!!

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008. This is an increase of eight (8)cents from the 50.5 cent rate in effect for the first six months of 2008, as set forth in Rev. Proc. 2007-70.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2008. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"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 CommissionerDoug Shulman. "We want the reimbursement rate to be fair to taxpayers."

The new six-month rate for computing deductible medical or moving expenses will also increase by eight (8) cents to 27 cents a mile, up from 19 cents for the first six months of 2008. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

http://www.irs.gov/newsroom/article/0,,id=184163,00.html