IRS Increases Mileage Rate to 55.5 Cents per Mile

The IRS today announced the increase of the standard mileage rates for the last six months of 2011 due to the increase in gasoline prices - action similar to 2008, the last time gasoline reached $4 per gallon.

The standard mileage rates are the following:

	Business	Medical/Moving	Charitable
July 1, 2011 - Dec. 31, 2011	55.5	23.5	14
Jan. 1, 2011 - June 30, 2011	51	19	14
2010	50	16.5	14
2009	55	24	14
July 1, 2008 - Dec. 31, 2008	58.5	27	14
Jan. 1, 2008 - June 30, 2008	50.5	19	14

To calculate use of personal vehicle for tax purposes, you can use one of two methods: standard mileage rate or actual expenses. If you qualify for both, calculate the deduction under both methods to see which gives you a larger deduction.

Actual expenses consist of the following costs:

• Depreciation
• Lease payments
• Tires
• Insurance
• Registration fees
• Garage rent
• Parking fees
• Licenses
• Tags
• Repairs
• Gas and oil

The car expenses can also include parking fees and tolls under either method. Note: this does not include commuting expenses, these are never deductible.

Once you elect to claim actual expenses when you first begin using the car for business you cannot change to the standard rate deduction later.