Mileage deduction jumps by 20%
IRS to allow 48.5 cents for business driving in 2006
By RYAN J. DONMOYER
Bloomberg News
RESOURCES
RATE INCREASE
Standard reimbursement rate for business driving in cents per mile:
• Sept. 1-Dec. 31, 2005: 48.5
• Jan. 1, 2005: 40.5
• Jan. 1, 2004: 37.5
• Jan. 1, 2003: 36.0
Source: Internal Revenue Service
The Internal Revenue Service, citing rising gasoline prices, said Friday it would boost by nearly 20 percent the mileage reimbursement limit for taxpayers who use their cars for work.
IRS Commissioner Mark Everson said the agency would raise the limit to 48.5 cents a mile from the current 40.5 cents, the biggest increase ever and more than double last year's 3 cent rise. The adjustment was effective Sept. 1 and will expire Dec. 31.
"This is an extraordinary step we're taking, but it is highly appropriate given the fact that taxpayers are entitled to this deduction," Everson said.
Regular-grade gasoline, averaged nationwide, surged to a record $3.057 on Sept. 2 because of supply disruptions caused by Hurricane Katrina, according to data released by AAA, the nation's largest motoring organization. Pump prices are up 67 percent from a year ago.
Everson said the agency, expecting a decline in gasoline prices, would set the 2006 reimbursement rate by year's end.
He said the increased deduction would cost "several hundred million dollars" and would be based on a fixed gasoline price of $3 a gallon.
The tax collection agency has come under pressure from Sen. Charles Schumer, D-N.Y., and a government union to immediately boost the reimbursement cap. Schumer said Thursday that the reimbursement rate should be temporarily raised to 60 cents a mile, up from the current 40.5 cents, to respond to higher fuel costs.
IRS to allow 48.5 cents for business driving in 2006
By RYAN J. DONMOYER
Bloomberg News
RESOURCES
RATE INCREASE
Standard reimbursement rate for business driving in cents per mile:
• Sept. 1-Dec. 31, 2005: 48.5
• Jan. 1, 2005: 40.5
• Jan. 1, 2004: 37.5
• Jan. 1, 2003: 36.0
Source: Internal Revenue Service
The Internal Revenue Service, citing rising gasoline prices, said Friday it would boost by nearly 20 percent the mileage reimbursement limit for taxpayers who use their cars for work.
IRS Commissioner Mark Everson said the agency would raise the limit to 48.5 cents a mile from the current 40.5 cents, the biggest increase ever and more than double last year's 3 cent rise. The adjustment was effective Sept. 1 and will expire Dec. 31.
"This is an extraordinary step we're taking, but it is highly appropriate given the fact that taxpayers are entitled to this deduction," Everson said.
Regular-grade gasoline, averaged nationwide, surged to a record $3.057 on Sept. 2 because of supply disruptions caused by Hurricane Katrina, according to data released by AAA, the nation's largest motoring organization. Pump prices are up 67 percent from a year ago.
Everson said the agency, expecting a decline in gasoline prices, would set the 2006 reimbursement rate by year's end.
He said the increased deduction would cost "several hundred million dollars" and would be based on a fixed gasoline price of $3 a gallon.
The tax collection agency has come under pressure from Sen. Charles Schumer, D-N.Y., and a government union to immediately boost the reimbursement cap. Schumer said Thursday that the reimbursement rate should be temporarily raised to 60 cents a mile, up from the current 40.5 cents, to respond to higher fuel costs.
