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Mileage rate increase

The Internal Revenue Service announced June 23 an increase in the optional standard mileage rates for the final six months of 2008. The rate will increase to 58.5 cents a mile for all business miles driven July 1, 2008, through Dec. 31, 2008.

This is an increase of eight cents from the 50.5 cent rate in effect for the first six months of 2008. In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2008. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. 

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.  The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu 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.