September 10, 2005 in Business

IRS boosts mileage reimbursement rate

Associated Press
 

WASHINGTON — The Internal Revenue Service, reflecting higher prices at gas pumps nationwide, on Friday increased the mileage reimbursement rate that workers claim when using personal cars for work.

The decision raised the rate to 48.5 cents a mile for the last four months of the year, after which the tax agency plans to look again at gas prices and reevaluate the rate. It had been 40.5 cents a mile.

IRS Commissioner Mark Everson said taxpayers are entitled to a deduction that matches the real cost of operating a vehicle, which includes the prices of new vehicles and insurance along with gasoline. Many businesses use the IRS rate as a benchmark for reimbursing employees for travel costs.

The tax agency said the decision to temporarily increase the rate 8 cents in the middle of the year marked the largest single increase on record.

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