The Internal Revenue Service has issued the 2006 standard mileage rates used to calculate the deductible costs of operating an automobile for business.
Beginning January 1, 2006, the standard mileage rate, which is the amount employers may deduct for the reimbursement of employees who use their own cars for company business, will be 44.5 cents per mile for business miles driven.
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," says IRS Commissioner Mark W. Everson. "We promised to continue closely monitoring the situation. The 2006 mileage rates reflect that gas prices have dropped."