On June 23, 20011, the Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.
Business Miles:
The rate will increase to 55.5 cents a mile and apply to miles driven from July 1, 2011, through Dec. 31, 2011.
Medical and Moving miles rates:
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.
Charitable mile rate:
The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.
Actual cost vs Mileage rate:
The optional business standard mileage rate and the actual cost are methods generally used to compute the deductible costs of operating an automobile for business use. The mileage rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
Keep in mind that gasoline price is a significant factor in the mileage figure, but not the only factor to take into account. Other factors are depreciation and insurance and other fixed and variable costs of operating a vehicle.
Source: IRS.gov
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