| Due to the increases in gas prices, the IRS mileage rate has increased to 58.5 cents a mile. The standard mileage rate for business use goes into effect July 1st 2008 through the end of the year.
The Revenue Procedure 2007-70 has been superceded by 2008-63, which went from 50.5 cents per mile beginning January 1, 2008. The IRS mileage allowance was increased 8 cents per mile for tax deductions
Effective July 1, 2008, an IRS standard mileage rate of 58.5 cents per mile. This will apply to business use of operating a vehicle. If the tests for the standard mileage rate are met, employers reimbursing up to this amount to employees who have substantiated the business use of the mileage are considered to have met the accounting requirements for the vehicle use, and therefore no income reporting or withholding is required on these reimbursements. The new rate applies to mileage expenses that are both incurred and reimbursed on or after July 1, 2008.
Employees who are not reimbursed for business use of a vehicle by their employers may deduct 58.5 cents per mile for mileage incurred on or after July 1 on their individual income tax returns, if they meet the requirements to use the standard mileage rate allowance.
The announcement also raises the standard mileage rate for medical and moving expenses to 27 cents per mile. The rate for mileage for charitable contributions remains, by law, at 14 cents per mile.
Not all employers or employees qualify for use of the standard mileage rate, and in some cases actual expenses must be used to determine the allowable amount. For more information on the accountable plan rules and the standard mileage rate, see section 5 of Publication 15 (this publication does not reflect this rate increase). |
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