In the wake of rising gasoline prices, the Internal Revenue Service and Treasury Department announced September 9, 2005, an increase to the optional standard mileage rates for the final four months of 2005.

The rate will increase to 48.5 cents a mile for all business miles driven between September 1 and December 31, 2005. This is an increase of 8 cents from the 40.5 cent rate in effect for the first eight months of 2005, as set forth by IRS procedures.

"This is about fairness for taxpayers," said IRS Commissioner Mark W. Everson. "People are entitled to deduct the real cost of operating a vehicle. We?ve responded to the recent gas price increases by making this special adjustment so taxpayers get the tax benefit they deserve."

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2005. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"With many predicting a decline in gas prices over coming months, we will hold off on setting the 2006 rate until closer to January," Everson said. Next year?s rate could be lower than 48.5 cents.

While gasoline is a major factor in the mileage figure, other items enter into the calculation of mileage rates, such as the price of new vehicles and insurance.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of the extra burden 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.

The new four-month rate for computing deductible medical or moving expenses will be 22 cents a mile, up from 15 cents for the first eight months of 2005. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

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.