IRS sets new mileage rate for 2006



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The New Year will ring in an Internal Revenue Service adjustment to the optional standard mileage rate used to calculate the deductible cost of operating an automobile for business purposes. The new 2006 rate has been set at 44.5 cents per mile for business purposes, according to a statement released by the IRS. The new rate represents a 4-cent decrease from the one-time temporary adjustment put into place in August when gas prices topped $3 a gallon. The new 2006 rate is 4 cents higher than the rate of 40.5 cents during the first eight months of 2005. "The IRS took the extraordinary step of temporarily increasing the standard mileage rates in the aftermath of Hurricane Katrina," IRS Commissioner Mark W. Everson said. "We promised to continue closely monitoring the situation. The 2006 mileage rates reflect that gas prices have dropped." Per-mile rates for driving associated with medical or moving purposes has been set at 18 cents, up from 15 cents for the first eight months of last year. Rates for charitable driving (except those associated with hurricane Katrina) have remained at 14 cents. For the period of Aug. 25-31, 2005, the rate for miles driven for charities related to hurricane Katrina relief is 29 cents for deduction purposes and 40.5 cents for reimbursement purposes. For September through December 2005, Katrina-related rates are 34 cents for deductions and 48.5 cents for reimbursements. Katrina-related charitable rates will decrease to 32 cents per mile for deduction purposes and 44.5 cents per mile for reimbursement purposes for 2006. --- TRACIE STONE Edit ModuleShow Tags
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