The Internal Revenue Service (IRS) has announced an increase in the optional standard mileage rates for the final six months of 2011, in recognition of recent increases in gasoline prices. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, medical, or moving expense purposes and for determining reimbursement amounts.

Revised Standard Mileage Rates 

  • The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011.
  • The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011.
  • The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

Purpose 

Rates 1/1 through 6/30/11  

  Rates 7/1 through 12/31/11  

Business

51

55.5

  Medical/Moving    

19

23.5

Charitable

14

14

 

Effect of Increase in Standard Mileage Rates 

The revised standard mileage rates apply to deductible transportation expenses paid or incurred for business, medical, or moving expense purposes on or after July 1, 2011, and to mileage allowances that are paid both:

  • To an employee on or after July 1, 2011, and
  • For transportation expenses paid or incurred by the employee on or after July 1, 2011.

The standard mileage rates set forth in Notice 2010-88 continue to apply to deductible transportation expenses paid or incurred for business, medical, or moving expense purposes before July 1, 2011, and to mileage allowances paid:

  • To an employee before July 1, 2011, or
  • With respect to transportation expenses paid or incurred by the employee before July 1, 2011.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Additional Information 

You can read more about this change in IRS Announcement 2011-40. For more on employer-provided transportation benefits, please see the HR360 section on Fringe Benefits

Topics: Employee Benefits

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