The Internal Revenue Service has announced an increase in the optional standard mileage rates for the final six months of 2008.
Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Effective July 1, 2008, the rates increased to 58.5 cents per mile for all business miles driven between July 1 and Dec. 31. The new rate reflects an increase of eight cents from the 50.5 cent rate applicable for the first six months of 2008.
The IRS typically updates mileage rates once a year in the fall for the next calendar year, but made a special adjustment this year due to the increasing cost of gasoline.
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 will also increase by eight cents to 27 cents a mile, up from 19 cents for the first six months of 2008. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile. Taxpayers also have the option of calculating their actual costs rather than using the standard mileage rates.