With gasoline prices touching record highs, the Internal Revenue Service is making a mid-year adjustment in the mileage deduction rate that could provide some much-needed relief for taxpayers who write off some of their automotive expenses.
The change will cover expenses accrued for the July-December half of the 2011 tax year. A mid-year change is rare and reflects the huge jump in gasoline prices this year.
Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes. The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011.
The IRS made this special adjustment for the final months of 2011 because of the big jump in gasoline prices this year. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.