Next year's mileage rate less than temporary rate for high gas prices

Friday, December 2nd 2005, 1:24 pm
By: News On 6

WASHINGTON (AP) _ The Internal Revenue Service on Friday set the deductible rate that workers can claim next year for using personal cars on business at 44.5 cents a mile.

That's less than a temporary rate that the tax agency put in place for the last four months of this year, reflecting higher prices at gas pumps nationwide. The temporary rate is 48.5 cents a mile.

Next year's rate is higher than the 40.5 cents a mile in effect for most of this year. Many businesses use the IRS rate as a benchmark for reimbursing employees for travel costs.

IRS Commissioner Mark Everson said in September, when he announced a temporary rate increase for the last few months of the year, that next year's rate could be lower if gas prices went down.

The rate for figuring deductible medical or moving expenses will be 18 cents a mile next year.

Congress sets the rate, currently 14 cents a mile, for individuals deducting travel costs related to charitable service.

Lawmakers established a special rate, 32 cents a mile, for deductions related to Hurricane Katrina charitable service. Organizations can reimburse volunteers working on Hurricane Katrina charity efforts at the business rate of 44.5 cents.