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IRS Increases Standard Mileage Rates Beginning July 1, 2008

The Internal Revenue Service announced on June 23, 2008 that the optional standard mileage rates will be increased on July 1, 2008. The IRS has made these adjustments in response to the increase in gasoline prices.

The rate will increase to 58.5 cents per mile for all business miles driven beginning July 1, 2008—8 cents up from the 50.5 cent rate in effect for the first six months of 2008, as set in Revenue Procedure 2007-70. The rate is used to compute the deductible costs of operating an automobile in connection with a business. The federal government and many businesses also use the rate as a standard for reimbursing their employees for business use of personal automobiles.

The new six-month rate for computing deductible medical or moving expenses will also increase by 8 cents to 27 cents per mile, up from 19 cents for the first six months of 2008. The rate for charitable organizations is set by statute and remains at 14 cents per mile.

Bills have also been introduced in both the House and Senate to increase the standard mileage rate for business, medical and moving purposes to 70 cents per mile and 40 cents per mile for charitable deduction purposes. However, these bills don't appear to have great chances of becoming law in 2008. 

IRS Announcement 2008-63 covers the new rates.

For more information, contact Inyoung Choi at 312-980-3283 or your Blackman Kallick representative.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.