People who can deduct mileage for business use, medical use or moving can now use a higher mileage rate set forth by the IRS in June. The IRS has changed the optional standard rates for the second half of 2008.
For business use the rate increased 8 cents, from 50.5 cents to 58.5 cents per mile. The new rate is effective from July 1st to December 31st. This has been set forth in Rev. Proc. 2007-70.
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 standard rate allows employees and businesses to compute the deductible cost of operating an automobile in lieu of tracking actual costs. Businesses can also use it reimburse employees for mileage.
The rate for medical and moving expenses also increased by 8 cents too, but the rate per mile is 27 cents. The rate for charitable use did not change. It stays at 14 cents per mile.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.