The IRS has announced that the optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) will increase by 1.5¢ to 57.5¢ per mile for business travel after 2014. This rate can also be used by employers to provide tax-free reimbursements to employees who supply their own autos for business use, under an accountable plan, and to value personal use of certain low-cost employer-provided vehicles. However, the rate for using a car to get medical care or in connection with a move that qualifies for the moving expense will decrease by 0.5¢ to 23¢ per mile. The mileage rate for driving an auto for charitable use (14¢ per mile) is a statutory rate that’s not adjusted for inflation.
IRS generally adjusts the standard mileage rate annually, based on a yearly study of the fixed and variable costs of operating an auto. However, the IRS has made mid-year adjustments in certain years when necessary to better reflect the real cost of operating an auto in light of rapidly rising gas prices.
When the new rates are effective: The revised standard mileage rates apply to deductible transportation expenses paid or incurred for business, medical, or moving expense purposes on or after Jan. 1, 2015, and to mileage allowances or reimbursements that are paid to an employee or charitable volunteer (1) on or after Jan. 1, 2015, and (2) for transportation expenses paid or incurred by the employee or charitable volunteer on or after Jan. 1, 2015.