The IRS periodically adjusts the standard mileage rate for deducting business use of vehicles. These rates reflect cost of vehicles, insurance, repairs, maintenance and – most importantly – gas.

To adjust for the higher gas prices, the rate has been raised from 50.5 cents/mile to 58.5 cents/mile, effective July 1, 2008. It is also worth noting that the deduction for medical miles is now 27 cents/mile. For the full article, see: IRS Increases Mileage Rates through Dec 1, 2008.

While this is good news for those who count on the standard mileage rate deduction to reduce their taxes, it further emphasizes the importance of proper record-keeping. You will have to know how many miles (business and personal) were driven between January 1 and June 30th and how many between July 1 and Dec 31st.

Categories: Tax News and Tips
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