2006 Standard Mileage Rate Set at 44.5 Cents
by January 16, 2006 12:00 am 94 views
The Internal Revenue Service has announced that the standard mileage rate for 2006 will be 44.5 cents a mile. The rate became effective Jan. 1.
The rate had temporarily been increased to 48.5 cents a mile for all business miles driven between Sept. 1 and Dec. 31 due to high fuel prices. That was an increase of 8 cents from the 40.5-cent rate that took effect Jan. 1, 2005.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business.
According to a press release about the change, the rate for miles driven for medical or moving purposes will be 18 cents per mile. And a 14 cents-per-mile rate will be allowed for miles driven in service of charitable organizations other than activities related to Hurricane Katrina relief. Visit irs.gov for specific tax break information.
The rate is used in lieu of the extra burden of tracking maintenance and repair costs. It is also used as a benchmark by some businesses and the government to reimburse employees for mileage.
Employees who may not receive the full 44.5-cent rate per mile from their employer can deduct the difference from their taxes as an un-reimbursed employee expense.
However, the total difference that was not reimbursed plus other miscellaneous deductions must generally exceed 2 percent of the individual’s adjusted gross income before they are allowed as a deduction on income taxes.
Both employers and employees are urged to seek tax advice from a certified public accountant or other tax specialist.