Tuesday, July 05 2011
In a rare midyear move, the Internal Revenue Service is increasing the tax deduction you can take for using personal vehicles for business.
On July 1, if you use your personal vehicle for business, you’ll be able to deduct 55 cents a mile from your taxable income. That marks a 4-cent increase from the beginning of this year.
While the IRS normally updates mileage rates once a year during the fall for the next calendar year, the tax agency decided to raise the gas mileage tax deduction earlier due to high gas prices. (The average gas price currently is $3.61 a gallon, which is up from $2.74 last year, according to AAA.)
"This year's increased gas prices are having a major impact on individual Americans,” IRS Commissioner Doug Shulman told USA Today. “The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices. We are taking this step so the reimbursement rate will be fair to taxpayers."
Source: “IRS Increases Gas Mileage Deduction at Midyear,” USA Today (June 23, 2011)