IRS Increases Mileage Rates Posted by AVCU on 1:18 PM

The Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional rates to calculate the deductible costs of operating an automobile for business and other purposes. The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011.

The IRS made this adjustment for the final months of 2011 due to recent increases in the price of gasoline. Normally, the IRS updates the mileage rates once a year in the fall for the next calendar year.

The optional business standard mileage rate is used to compute deductible costs of operating an automobile for business use in lieu of tracking actual costs, and also as a benchmark by federal government and many businesses to reimburse employees for mileage. 

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile. The new rates are contained in Announcement 2011-40.

Purpose	Rates 1/1 - 6/30	Rates 7/1 - 12/31
Business	51	55.5
Medical/Moving	19	23.5
Charitable	14	14