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For those of you who use your car for business purposes, the IRS has increased the reimbursement rate to 48.5 cents per mile...
IRS Increases Mileage Rate Until Dec. 31, 2005

IR-2005-99, Sept. 9, 2005

WASHINGTON – The Internal Revenue Service and Treasury Department announced today an increase to the optional standard mileage rates for the final four months of 2005.

The rate will increase to 48.5 cents a mile for all business miles driven between Sept. 1 and Dec. 31, 2005. This is an increase of 8 cents from the 40.5 cent rate in effect for the first eight months of 2005, as set forth in Rev. Proc. 2004-64.

“This is about fairness for taxpayers,” said IRS Commissioner Mark W. Everson. “People are entitled to deduct the real cost of operating a vehicle. We’ve responded to the recent gas price increases by making this special adjustment so taxpayers get the tax benefit they deserve.”

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2005. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

“With many predicting a decline in gas prices over coming months, we will hold off on setting the 2006 rate until closer to January,” Everson said. Next year’s rate could be lower than 48.5 cents.

While gasoline is a major factor in the mileage figure, other items enter into the calculation of mileage rates, such as the price of new vehicles and insurance.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of the extra burden 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.

The new four-month rate for computing deductible medical or moving expenses will be 22 cents a mile, up from 15 cents for the first eight months of 2005. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The annual Revenue Procedure includes limitations on who is not eligible to use the standard mileage rate.
 

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heh... "People are entitled to deduct the real cost of operating a vehicle."

I think even 30 cents a mile is a bit generous for the Prius. (I figured out that with the entire purchase price, gas at an average $2.50/gal over the course of the time, insurance and maintenance costs, my Prius would be paid for by my mileage reimbursement, at LAST year's rates, in 4 years of ownership. After that, mileage reimbursement would be almost pure profit.)
 

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So far, I factored that the Prius is costing me 44 cents a mile, not including insurance, but including extended warranty. Most of that is in purchase cost, including finance cost. Equity is also factored into the cost per mile, which right now is a cost rather than an asset.
 
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