The Internal Revenue Service (IRS), raised vehicle deduction rates for businesses by almost nine percent. Under U.S. tax law, businesses are allowed to deduct 55.5 cents per mile traveled as an expense against income. This is up from the old rate of 51 cents. Industry watchers made note of this development for a couple of reasons. Mainly, the IRS typically announces such things at the end of the year, and the rates themselves take effect on January 1 or the following year. If you have tax problems, you might know that the IRS likes to make press releases concerning rate changes that are almost invariably detrimental to taxpayers' wallets.
First, even if you don't have tax problems or own your own business, the bottom line is that owners can now deduct 55.5 cents per mile for auto expenses, which is about nine percent higher than the old rate. Second, this is the first time, ever, that the IRS has upped the rate in the middle of the year. The typical upping occurs only once per year, if at all.
The IRS, along with the allowance increase announcement, held a press conference in which it explained its rationale. First, the recent significant increases in world oil prices have caused gasoline's pump price to hit $4 in wide cross sections of the nation. Secondly, IRS spokespersons delineated the exact figures for each type of taxpayer that is affected. For one thing, small business owners get the new 55.5 cent rate, while moving and medical travel rates will jump a whopping amount, from 19 cents to 23.5 cents. For charitable, or so-called non-profit organizations, there was not an increase in the allowable deduction for travel, thus the IRS left that rate at its 14 cents per mile.
Some taxpayers have wondered if this move means that the IRS will also dole out another increase next year. Those people might as well keep wondering, because the IRS is unpredictable, if anything. Also keep in mind that the agency mentioned in the press conference that this was sort of an emergency situation related to the extremely high gasoline prices of late.
The IRS is a federal government agency based in Washington, D.C., with 10 service centers around the U.S. The first commissioner of the IRS was George S. Boutwell, appointed by President Lincoln in 1862. The IRS was created to collect as an emergency provision to collect a temporary income tax of five percent in order to finance the Civil War. While the IRS is officially headquartered in the District of Columbia, its computer center is in Maryland.
First, even if you don't have tax problems or own your own business, the bottom line is that owners can now deduct 55.5 cents per mile for auto expenses, which is about nine percent higher than the old rate. Second, this is the first time, ever, that the IRS has upped the rate in the middle of the year. The typical upping occurs only once per year, if at all.
The IRS, along with the allowance increase announcement, held a press conference in which it explained its rationale. First, the recent significant increases in world oil prices have caused gasoline's pump price to hit $4 in wide cross sections of the nation. Secondly, IRS spokespersons delineated the exact figures for each type of taxpayer that is affected. For one thing, small business owners get the new 55.5 cent rate, while moving and medical travel rates will jump a whopping amount, from 19 cents to 23.5 cents. For charitable, or so-called non-profit organizations, there was not an increase in the allowable deduction for travel, thus the IRS left that rate at its 14 cents per mile.
Some taxpayers have wondered if this move means that the IRS will also dole out another increase next year. Those people might as well keep wondering, because the IRS is unpredictable, if anything. Also keep in mind that the agency mentioned in the press conference that this was sort of an emergency situation related to the extremely high gasoline prices of late.
The IRS is a federal government agency based in Washington, D.C., with 10 service centers around the U.S. The first commissioner of the IRS was George S. Boutwell, appointed by President Lincoln in 1862. The IRS was created to collect as an emergency provision to collect a temporary income tax of five percent in order to finance the Civil War. While the IRS is officially headquartered in the District of Columbia, its computer center is in Maryland.
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