Monday, June 30, 2008

IRS Hikes Mileage Rates

The IRS has announced a couple of changes in the deductible mileage rates for taxpayers starting Tuesday, July 1, 2008. The changes are due to the dramatic increase in gas prices in the first part of 2008.

  • The business mileage rate will be set to 58.5 cents per mile which is up 8 cents.
  • The medical mileage rate will be set to 27 cents per mile which is also up 8 cents.
  • The charitable mileage rate will remain at 14 cents per mile – this is a rate set by statute and not the IRS, so they cannot move it

The 8 cent hike is not without precedent. In 2005, in the wake of Hurricane Katrina, the IRS raised the rate 8 cents to 48.5 cents, but they moved it back down to 44.5 cents for 2006. The rate was increased back to 48.5 cents in 2007 before increasing to 50.5 cents at the beginning of 2008.

Maybe Congress will get together and decide that helping a charity should give you a bit of a larger break on the mileage. I know it will never happen that they will agree on anything, but it was a thought…

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