Last Friday, the Internal Revenue Service (IRS) issued the optional standard mileage rate to be used with the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning January 1, 2006, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
- 44.5 cents per mile for business miles driven
- 18 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations, other than activities related to Hurricane Katrina relief
The new rate for business miles, while higher than the 40.5 cent per mile rate used for three-quarters of 2005, is lower than the 48.5 cent per mile rate used in the aftermath of Hurricane Katrina when fuel prices exceeded $3 a gallon. The medical mileage rate is also an increase over 2005’s 15 cent per mile rate but is still lower than the post-Katrina rate of 22 cents per mile.
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“The IRS took the extraordinary step of temporarily increasing the standard mileage rates in the aftermath of Hurricane Katrina,” IRS commissioner Mark W. Everson said in a prepared statement. “We promised to continue monitoring the situation. The 2006 mileage rates reflect that gas prices have dropped.”
The mileage rate for charitable miles is set by statute and this year Congress also approved special rates in connection with miles driven in service of charities providing Hurricane Katrina relief. Between August 25 and August 31, 2005, the rate for miles driven for charities providing Hurricane Katrina relief is 29 cents for deduction purposes and 40.5 cents for reimbursement purposes. A special Katrina-related rate of 34 cents per mile for deductions and 48.5 cents per mile for reimbursement applies to mileage driven between September and December. The 2006 rate for miles driven in connection with charities providing Katrina-related relief will be 32 cents per mile for deduction and 44.5 cents per mile for reimbursement purposes, both are considerable higher than the 14 cents per mile rate for miles driven for all other charitable activities.
Additional information and limitations on the use of the standard mileage rate can be found in
Revenue Procedure 2005-78.