On June 23rd, the IRS announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008. That’s an 8 cent increase from the rate for the first six months of 2008. The IRS normally updates the mileage rates once a year in the fall for the next calendar year but because of the rising price of gas, they’ve decided to make the adjustment.
"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.” –Commissioner Doug Shulman
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 new rates are contained in Announcement 2008-63 on the optional standard mileage rates.
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