TaxNewsFlash-Exempt Organizations

June 23, 2008
No. 2008-54

PRINTABLE VERSION

IRS Increases Mileage Rate to 58.5-Cents per Business Mile for the Last Six Months of 2008

The IRS today issued an advance copy of Announcement 2008-63 which provides for an increase to 58.5-cents per mile for the optional standard mileage rate that applies for business miles driven from July 1 to December 31, 2008. Today’s IRS guidance adds 8-cents per mile to the existing standard mileage rate of 50.5-cents per mile that is in effect for the first half of 2008 (under Rev. Proc. 2007-70).

Today’s announcement also includes increases to the optional standard rates used to calculate the deductible costs of operating an automobile for medical or moving purposes (as listed in the IRS table, below):

Mileage Rate Changes

Purpose	*Rates 1/1 through 6/30/08**	*Rates 7/1 through 12/31/08**
Business	50.5	58.5
Medical/Moving	19	27
Charitable	14	14

Source: IRS *cents per mile

The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14-cents a mile.

As explained by the IRS in a related release (IR-2008-82, June 23, 2008), the special adjustment recognizes recent gasoline price increases, given that the IRS typically updates the mileage rates once a year in the fall for the next calendar year.

For an electronic version of today’s announcement: Announcement 2008-63

Background

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

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

For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or rspeizma@kpmg.com

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