IRS Increases Mileage Rate until December 31, 2005

IRS Increases Mileage Rate until December 31, 2005

Because of rising gasoline costs, the IRS increased its standard mileage rate from 40.5 cents to 48.5 cents for the final four months of 2005.

The IRS standard mileage rate is the benchmark many employers use to reimburse their employees for mileage when they use their personal vehicles for work. An employer may reimburse an employee for use of a private vehicle on official business at 48.5 cents per mile (or less) without having to report the reimbursement as taxable income.

The IRS normally updates the mileage rates once a year in the fall for the next calendar year, but decided to increase the rate for the final four months of 2005, to better reflect the real cost of operating a vehicle. Later this year, the IRS will determine the 2006 rate, which could be less than 48.5 cents.