Standard Business Mileage Rates to Increase

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High gas prices have prompted the IRS to adjust the standard business mileage rates. “This year’s increased gas prices are having a major impact on Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices,” said IRS Commissioner Doug Shulman.

Typically the IRS sets the standard mileage rates during the last quarter of the year for the upcoming year. Very seldom to they increase the rates during a tax year. The increase in the standard mileage rates was announced on Thursday, June 23, 2011. The rate will increase by 4.5 cents to 55.5 cents per business mile. This increase will be in effect from July 1, 2011 through December 31, 2011.

The standard business mileage rate is utilized by taxpayers to calculate the deductible costs of operating automobiles for business purposes. This is an optional method of computing the allowable deductible costs rather than tracking actual costs and used by the IRS as guide. The standard business mileage rate is only available to companies using four or fewer vehicles. Companies also typically use this rate to reimburse employees for business use of their personal vehicles.

Along with the increase in the standard business mileage rate, the IRS also increased the medical and moving mileage rates to 23.5 cents per mile. The charitable mileage rate will remain at 14 cents per mile.

Suzonne Vicknair Cowart CPA

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