December 2, 2005

WASHINGTON — The Internal Revenue Service today issued the 2006 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning Jan. 1, 2006, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

• 44.5 cents per mile for business miles driven;
• 18 cents per mile driven for medical or moving purposes; and
• 14 cents per mile driven in service of charitable organizations, other than activities related to Hurricane Katrina relief.  

The new rate for business miles compares to a rate of 40.5 cents per mile for the first eight months of 2005. In September, the IRS made a special one-time adjustment for the last four months of 2005, raising the rate for business miles to 48.5 cents per mile in response to a sharp increase in gas prices, which topped $3 a gallon.

“The IRS took the extraordinary step of temporarily increasing the standard mileage rates in the aftermath of Hurricane Katrina,” IRS Commissioner Mark W. Everson said. “We promised to continue closely monitoring the situation. The 2006 mileage rates reflect that gas prices have dropped.”

The standard mileage rates for business, medical and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. Runzheimer International, an independent contractor, conducted the study for the IRS.

The mileage rate for charitable miles is set by statute.

For the first eight months of 2005, the standard rate for miles driven for medical or moving purposes was 15 cents per mile, and, except for special Hurricane Katrina rates, the standard rate for miles driven in service of a charitable organization was 14 cents per mile.

For the last four months of 2005, the agency raised the standard rate for miles driven for medical or moving purposes to 22 cents per mile. The standard rate for charitable miles remained at 14 cents per mile––except for charitable miles relating to Hurricane Katrina.

Special Rates for Katrina-Related Charitable Miles

Congress this year also approved special rates in connection with miles driven in service of charities providing Hurricane Katrina relief.

For the period Aug. 25 to Aug. 31, 2005, the rate for miles driven for charities providing Hurricane Katrina relief is 29 cents, for deduction purposes, and 40.5 cents, for reimbursement purposes. For the months of September through December 2005, the special Katrina-related rates are 34 cents for deductions and 48.5 cents for reimbursements.

For 2006, these Katrina-related charitable rates will be 32 cents per mile for deduction purposes and 44.5 cents per mile for reimbursement purposes.

Revenue Procedure 2005-78 contains additional information and limitations on the use of the standard mileage rates. 

December 2, 2005

WASHINGTON — The Internal Revenue Service today issued the 2006 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

WASHINGTON -  Taxpayers will be able to request an automatic, six-month tax-filing extension for most common individual and business returns under regulations released today by the Treasury Department and the Internal Revenue Service.

 November 7, 2005

 WASHINGTON -  The Internal Revenue Service has certified the model year 2006 Ford Escape Hybrid and the 2006 Mercury Mariner Hybrid vehicles as being eligible for the clean-burning fuel deduction. This certification means that taxpayers who purchase one of these hybrid vehicles new during calendar year 2005 may claim a tax deduction of up to $2,000 on Form 1040.

September 30, 2005

The indexing of many features of the tax code will bring some relief to taxpayers next year, according to CCH Tax and Accounting, a leading provider of tax law information, software and services, which on September 21, 2005, released estimated income ranges for each 2006 tax bracket.

September 29, 2005

Despite its reputation for sometimes acting slowly on policy initiatives, the federal government has moved swiftly to change tax laws in order to aid those stricken by disasters in the Gulf Coast.