The IRS recently announced they plan to increase the standard mileage rate for the second half of 2008, as a result of freakishly high fuel prices. You can use these rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
After July 1, 2008, the per mile rate will increase to 58.5 cents a mile for all business miles driven in the remainder of this year. This is an increase of eight cents per mile from the previous effective rate of 50.5 cents per mile. This adjustment was made due to the rise in gasoline prices in recent months.
“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.”
Interestingly, the standard mileage rate is factored using variable such as depreciation, insurance costs and other variables in addition to the cost of fuel. The standard mileage rate is used to calculate deductible costs for business travel, rather than tracking actual costs.
The new rate for calculating deductible medical or moving expenses will also increase by eight cents to 27 cents per mile, up from 19 cents in the earlier part of the year. 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.
New IRS Mileage Rates
Business – 58.5
Medical/Moving – 27
Charitable – 14