The Internal Revenue Service and Treasury Department announced an increase to the optional standard mileage rates for the final four months of 2005.
The rate will increase to 48.5 cents a mile between Sept. 1 and Dec. 31, 2005 -- an increase of 8 cents. The temporary rate change was a rarity; the IRS normally updates the mileage rates once a year in the fall for the next calendar year.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use, instead of tracking actual costs. The rate is used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
"This is about fairness for taxpayers," said IRS Commissioner Mark W. Everson, in a statement. "People are entitled to deduct the real cost of operating a vehicle. We've responded to the recent gas price increases by making this special adjustment so taxpayers get the tax benefit they deserve."
Everson said that the IRS would hold off on setting the 2006 rate until closer to January. While gasoline is a major factor in the mileage figure, other items enter into the calculation of mileage rates, such as the price of new vehicles and insurance.The medical and moving rate rose 7 cents, to 22 cents per mile, while the rate for providing services for charitable organizations is set by statute, not the IRS, and will remain at 14 cents a mile.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access