IRS Announces Standard Business Mileage Rate
The Internal Revenue Service on Nov. 17 released the optional standard mileage rate to use for 2005 in computing the deductible costs of operating an automobile for business purposes.
Beginning Jan. 1, the standard mileage rates for the use of a car (including vans, pickups, or panel trucks) will be: 40.5 cents a mile for all business miles driven, up from 37.5 cents a mile in 2004, according to the NAFA Fleet Focus e-mail newsletter. The 3-cent increase in the business mileage rate was the largest one-year rise ever. The primary reasons were higher prices for vehicles and fuel during the year ending in September.
The standard mileage rate is based on an annual study of the fixed and variable costs of operating an automobile. An independent contractor, Runzheimer International, conducted the study for the IRS. The IRS announcement was made in IRS Revenue Procedure 2004-64.