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IRS lifts rates for vehicle mileage

June 24, 2008|From the Associated Press

WASHINGTON — The Internal Revenue Service, citing the drain that high gasoline prices are having on people's finances, said Monday that it was raising the automobile mileage rate that businesses and others can claim as tax deductions.

The agency said the optional standard rate to calculate deductible operating costs for business vehicles would rise to 58.5 cents a mile from 50.5 cents for the final six months of 2008.

That rate also applies to businesses and others entitled to depreciation allowances that operate automobiles for charitable, medical or moving purposes.

"Rising gas prices are having a major impact on individual Americans," IRS Commissioner Doug Shulman said. "Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile."

Shulman said the agency had been keeping an eye on gas prices since 2005, when there was a jump in prices after Hurricane Katrina.

He said officials wanted to announce the rate change so businesses could perform midyear adjustments to take effect July 1.

The IRS said it was also changing the rate for computing deductible medical or moving expenses to 27 cents a mile from 19 cents for the final six months of the year. That applies to individuals not entitled to depreciation allowances.

Changing the rate for providing services for charitable organizations requires congressional action, so that will stay at 14 cents a mile.

The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

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