The Internal Revenue Service has released its optional standard mileage rates
for automobile reimbursement for 2004.
The rates apply in computing the deductible costs of operating an automobile
for business, charitable, medical, or moving-expense purposes.
To reduce a recordkeeping burden, the IRS also announced that taxpayers who
use no more than four vehicles at the same time for business purposes may use
the standard mileage rate, starting in 2004. Currently, those using more than
one vehicle at a time cannot use the standard rate at all, leaving them to track
the actual expenses for each vehicle.
"With this change, more than 800,000 businesses will become eligible to
use the standard mileage rate," said IRS Commissioner Mark W. Everson.
"This reflects our ongoing interest in reducing the burden for businesses
to comply with the tax laws."
Beginning Jan. 1, 2004, the standard mileage rates for the use of a car (including
vans, pickups, or panel trucks) will be:
- 37.5 cents a mile for all business miles driven, up from 36 cents a mile
- 14 cents a mile when computing deductible medical or moving expenses, up
from 12 cents a mile in 2003; and
- 14 cents a mile when giving services to a charitable organization.
The standard mileage rates for business, medical and moving purposes are based
on an annual study of the fixed and variable costs of operating an automobile.
The primary reason for the mileage rate increases is the rise in fuel prices
during the study period, which ended on June 30. The charitable standard mileage
rate is set by law.