IRS announces new business driving mileage rate

The IRS has announced new standard mileage rates for calculating the deductible costs of operating an automobile for business, charitable, medical or moving purposes that will be employed beginning Jan. 1, 2008.

The mileage rate will increase two pennies to 50.5 cents per mile for business miles driven, and the mileage rate for medical or moving purposes will decrease a penny to 19 cents per mile. The mileage rate for miles driven on behalf of charitable organizations will remain 14 cents per mile.

An annual study of the fixed and variable costs of operating an automobile helps determine the standard mileage rate for business. Variable costs from the same study help determine the standard rate for medical and moving purposes, and the rate for charitable miles is set by law.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System; after claiming a Section 179 deduction for that vehicle; for any vehicle used for hire; or for more than four vehicles used simultaneously.

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Date : 11/30/2007