Main Page

IRS Increases Mileage Rates through Dec. 31, 2008

IR-2008-82, June 23, 2008

WASHINGTON — The Internal Revenue Service today 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. 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 Commissioner Doug Shulman. "We want the reimbursement rate to be fair to taxpayers."

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.

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 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.

The new rates are contained in Announcement 2008-63 on the optional standard mileage rates.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

• IRS Sending Stimulus Payment Information to Retirees, Veterans IRS
• Scammers Use e-Mail, Fax to Pose as IRS IRS
• National Taxpayer Advocate Releases Report to Congress; Identifies Priority Challenges and Issues for Upcoming Year IRS
• Filing Extensions Changing for Some Business Taxpayers Later this Year IRS

- Chapter 7 or 11?
- POA form
- Where are the Flippers?
- Foreign Tax Question...
- Accounting for legal fees

- Equitable or Beneficial Ownership
- Current events
- Australia Protocol
- Internal Revenue Bulletin 2007-16
- Internal Revenue Bulletin Index - 2007

Innovation Award - TaxAlmanac was selected as a recipient of the Tax and Accounting Technology Innovation Award for its use of "Wiki" technology to provide a free interactive tax research portal for professionals and for allowing professionals to assist each other through collaboration.

The Innovation Awards are sponsored by The CPA Technology Advisor "as a means to recognize innovative developments in technologies that benefit the tax and accounting professions, as well as significant advancements in existing technologies."

Congratulations to TaxAlmanac and to the TaxAlmanac Community for making this happen!