IRS Mileage Rate

IRS Mileage Rate

Increasing gas prices is a great cause for concern for vehicle owners, especially those who need to use vehicles on a regular basis. As part of the IRS’ incentives for business owners, all those who are required to use vehicles to carry out business activities are allowed to claim mileage deduction when they file their tax returns. Since the deduction is calculated on a per mile basis, you can expect to get a considerably large amount of tax deduction if you are putting a lot of miles on your vehicles.

The IRS mileage rate may not remain the same from year to year, and it changes according to certain circumstances that affect transportation costs, one of which is the rise of gas prices. In the beginning of 2011, the mileage rate was 51 cents per mile for those who use their vehicles for business-related travel. However, due to the increase of gas prices in spring, the IRS decided to implement a midyear mileage rate increase of 4.5 cents. This means that you will get a tax deduction of 55.5 cents for every mile that your vehicles travel while performing business-related duties. This new mileage rate can help you save more money if the vehicles that you are using are economical. The increase in the amount of tax deduction that you will be getting may be proportionately more than the increase in the actual cost of using your vehicles.

The IRS does not only offer tax deduction for those who use vehicles to perform business-related duties. Its mileage deduction is also applicable to people who need to use their vehicles for seeking medical treatment, moving, and charity-related travel, but the rate varies from one purpose to another. If you need to drive your vehicle to a medical facility or transport your belongings to a new home, you can claim a tax deduction of 23.5 cents for every mile traveled. This new rate is 4.5 cents higher than the previous rate that was implemented in the beginning of the year. The deduction for medical-related vehicle usage is especially helpful for people who need to travel to medical facilities frequently to receive medical treatment. If you are involved in charitable activities and you have to use your vehicle to perform charity-related duties, you are entitled to a tax deduction of 14 cents for every mile traveled.

To make sure that you will get the full mileage deduction that you are eligible for, you need to take the necessary measures to record the total mileage on your vehicles correctly. You should have a log book to record the odometer readings on all your vehicles on a regular basis. If your employees are the ones who are driving your vehicles, you can ask them to record the distances they travel every day in the log book. Once you have added up the total number of miles traveled in the tax year, you have to multiply it with the IRS mileage rate to come up with the total amount of tax deduction that you can claim.