IRS Increases Mileage Rate for remainder of 2011
(An excerpt from IRS.gov)
(June 23, 2011) WASHINGTON — Earlier today the Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. According to IRS Commissioner Doug Shulman, the adjustment to the standard mileage rates is prompted by this year’s increase in gas prices.
The rate will increase 4.5 cents to 55.5 cents a mile from 51 cents for all business miles driven from July 1, 2011, through Dec. 31, 2011.
Typically, the IRS updates the standard mileage rates once a year; historically in the fall for the next calendar year. In acknowledgment of recent gasoline price increases, Shulman noted, "We (IRS) are taking this step so the reimbursement rate will be fair to taxpayers."
While gasoline is a significant factor in the mileage figure, other items such as depreciation and insurance and other fixed and variable costs, were contributing factors in the calculation of mileage rate increase.
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 also increases by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. However, the rate for providing services for charitable organizations is not set by the IRS, and remains at 14 cents a mile.
For more information on the new rates, please visit the IRS Newsroom or see Announcement 2011-40 on the optional standard mileage rates.
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