The Internal Revenue Service announced a mid-year increase in the optional standard business mileage rate. This rate is suggested by the government for employees, self-employed individuals, or other taxpayers to use when computing the tax-deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. The increase will raise the allowance for business travel by 4.5 cents. Previously, the rate was 51 cents per mile. It will now be 55.5 cents per mile. This rate will apply from July 1, 2011 to December 31, 2011. It’s the highest IRS standard rate since late 2008.
- Reimburse employees who use their own vehicles for business.
- Place value on personal use of some employer-provided vehicles.
The change comes after a significant increase in gas prices over the past few months. It aims to better reflect the actual cost of operating an automobile during a time of rapidly increasing gasoline prices. Keep in mind, because the rates for the first and second halves of the year will be different, taxpayers must be diligent about keeping good gas mileage records, including dates of travel.
So, what does this change mean for everyone? As an employee, how do you feel this rate change may affect you? Are you an employer? What affect do you think it might have for your business?