As most small businesses are aware, a tax deduction can be taken
for mileage incurred in normal business travel. In light of high
gas prices, the IRS has upped the mileage rate.
Major Increase
Nothing is worse than sitting at the pump and watching the
dollar figures tick over. In fact, I paid over $3.30 a gallon
this morning in San Diego. What a way to start the week!
Fortunately, the IRS is granting some relief.
In 2004, the IRS set the standard mileage deduction rate at 40.5
cents per mile for 2005. Obviously, gas prices were just a bit
lower in 2004. Apparently, employees at the IRS have noticed
this and action is being taken.
The IRS has announced the standard mileage rate is being
increased from 40.5 cents to 48.5 cents. While this is the
single largest increase ever issued by the IRS, there is a
downside. The 48.5 cent figure only applies for mileage
undertaken from September 1, 2005 through December 2005.
The less well known medical and moving mileage rate is also
being upped. Previously set at 15 cents a mile, the IRS is
increasing the rate to 22 cents a mile. Again, the increased
rate is only applicable for the last four months of 2005.
Comment
I don't want to sound greedy, but I seem to remember gas prices
being outrageously high prior to September 2005. Others have
apparently expressed the same thought to the IRS. The response
of the Agency is it expects gas prices to drop significantly
over the next few months, which should make everything a wash.
Undoubtedly, this is news to the oil companies!
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