In Announcement 2011-40, the Internal Revenue Service (IRS) has revised the optional standard mileage rates for computing the deductible costs of operating an automobile for business purposes. While gasoline costs are a major factor the IRS also considered depreciation and insurance and other fixed and variable costs when revising the rate from $0.51 cents per mile to $0.55 cents per mile effective July 1, 2011. If your employee handbook follows the IRS optional standard mileage rates, please be sure to adjust your business mileage reimbursements.
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.
Mileage Rate Changes
|Purpose||Rates 1/1 through 6/30/11||Rates 7/1 through 12/31/11|