The IRS announced a four and half cent increase to the amount that commuters can deduct on their tax returns. This comes as a big surprise since it was recently reported that IRS officials would be hesitant to make the change during the middle of the year. However, it is likely no coincidence that this announcement comes on the same day that the Obama Administration decided to release thirty million gallons of oil reserves to try to push gas prices down during the summer.
This new change will allow commuters to deduct 55.5 cents per mile for business travel, 23.5 cents per mile for moving or medical travel and 14 cents per mile for travel related to charitable deductions.
Why the Standard Mileage Increase?
The IRS acknowledged that they made the change in recognition of recent gasoline price increases. Typically, the IRS updates the standard mileage rates once a year in the fall for the next calendar year. This new change is effective from July 1st until the end of 2011. In 2012, the mileage rate will likely come down but it is somewhat dependent on gas prices and other factors.
Not Familiar with the Standard Mileage Rate Deduction?
Essentially the standard mileage rate deduction is for instances in which you drive your personal car for business, medical reasons, or in support of a charitable organization. The mileage rate deduction is claimed as an itemized deduction on your tax return if you are itemizing for the year. Remember, you can either itemize deductions or take the standard deduction. Also, please note that you likely cannot take this same deduction if you are using a business vehicle for these purposes; it is just for personal vehicles.
More Tax Deduction Questions? Browse Answers or Ask a Tax Expert
Related Articles
->Commuters Shouldn’t Expect a Standard Mileage Rate Increase
->Is There A Way to Save Money when Buying An Electric Car?
->With Gas Prices So High, Is There a Good Way I Can Still Save?
->Car Insurance and Other Potential Vehicle Tax Deductions
->Summer Travel Spending: Cutting the Costs
