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Claim Your Free Copy of Overtime Primer: Highlights from the New Regulations

The federal DOL overtime regulations go into effect this year. Are you ready?

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This report includes a summary of key changes, including the salary level test and salary basis test.

As a bonus, we've included a handy flowchart to help you determine exemption status under the FLSA.

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June 24, 2011
IRS Increases Mileage Rate for Last 6 Months of 2011

The IRS announced an increase in the standard mileage rates for the last six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

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Updated: For information on 2013 mileage rates, read New standard mileage rates announced for 2013.

Beginning on July 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 55.5 cents per mile for business miles driven (4.5 cent increase)
  • 23.5 cents per mile for medical or moving purposes (4.5 cent increase)

The rate for providing services for charitable organizations remains at 14 cents a mile.

The new rate of 55.5 cents per mile is the highest IRS standard mileage rate since the second half of 2008 (58.5 cents per mile.) The increase is partly due to increased gas prices.

"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Shulman. "We are taking this step so the reimbursement rate will be fair to taxpayers."

Other factors contributing to the increase include depreciation and insurance and other fixed and variable costs, according to the IRS.

The agency normally updates the mileage rates once a year in the fall for the next calendar year.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

Employers that use the IRS standard mileage rate to reimburse employees may deduct the reimbursement as a business expense. If employers use the approved rate (or a lower rate), the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses.

The new rates are contained in Announcement 2011-40 on the optional standard mileage rates.

Related resource:

Important Tax Dates for Employers

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Top 100 FLSA Overtime Q&As
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