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Standard Mileage Rate increase for last quarter 2005

Discussion in 'Business Operations' started by Woody82986, Sep 9, 2005.

  1. Woody82986

    Woody82986 LawnSite Silver Member
    from DFW, TX
    Posts: 2,128

    The IRS just raised the mileage rate for the last quarter of this year.

    WASHINGTON - The Internal Revenue Service Friday increased a mileage rate used to compute the deductible costs of operating an automobile for business due to the sharp rise in gasoline prices.

    It also delayed setting the 2006 rate, saying gas prices may decline before the start of the new year.

    "This is about fairness for taxpayers," said IRS Commissioner Mark Everson. "People are entitled to deduct the real cost of operating a vehicle. We've responded to the recent gas price increases by making this special adjustment so taxpayers get the tax benefit they deserve."

    The tax-collecting agency boosted the optional standard mileage rate to 48.5 cents a mile for all business miles driven in the last four months of 2005, up 8 cents from the rate used so far this year.

    The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of the extra burden of tracking actual costs. This rate is also used as a benchmark by the U.S. Government and some businesses to reimburse employees for mileage.

    The IRS normally updates mileage rates once a year in the fall for the next calendar year. But it said it would delay setting the 2006 rate until nearer to January because gas prices could decline over the next few months.

    Gas prices have soared above $3 a gallon and far higher in some places because of a sudden drop in supplies following Hurricane Katrina.

    I guess they broke precedent. They usually don't cahnge the rate mid year, but I am kind of glad they did. It will mean a little more money in the pocket.

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