Not all driving for business purposes is performed by fleet vehicles; many employees occasionally need to use their personal vehicles for business purposes, with mileage reimbursed at a rate dictated by the government. With fuel costs rising and the economy still in need of some recovery, the IRS is increasing the Standard Mileage Rate for business expenses to 55.5 cents per mile, up from 51 cents per mile.
The new mileage rate applies to deductible transportation expenses, to mileage allowances paid to an employee, and to transportation expenses paid or incurred by the employee.
Employers should start using the new rates for reimbursement on July 1, 2011. Any miles accumulated in the first half of 2011 should still be computed at the old rate of 51 cents per mile.
The mileage deduction rates for miles driven for medical and moving purposes are also being increased from 19 to 23.5 cents per mile. The current deduction rate for miles driven for charitable purposes remains at 14-cents-per-mile.
Unless the IRS extends the changes, rates will return to the pre-July standards on January 1, 2012.
Photo courtesy of J Rosenfeld and re-used under the Creative Commons license.