Standard Mileage Deduction Rates 2005 and 2006
Below is a MRR and PLR article in category Finance -> subcategory Taxes.
Standard Mileage Deduction Rates for 2005 and 2006
Overview
For business owners, staying updated on the IRS mileage deduction rates is essential. In 2005, these rates fluctuated significantly due to rising gas prices, and new rates for 2006 have been announced.
2005 Mileage Deduction Rates
In an unusual move, the IRS set two different mileage deduction rates in 2005. These rates represent the deductible amount per business mile driven. For example, if you drove 1,000 miles for business in 2005, you could claim a deduction based on the specified rate.
- January to August 2005: The rate was 40.5 cents per mile. Thus, a person driving 1,000 business miles could claim a deduction of $405.
- September to December 2005: Due to soaring gas prices, the IRS increased the rate to 48.5 cents per mile. This means the deduction for the same 1,000 miles would be $485.
It's important to note that this increased rate applied only to the last four months of the year. The IRS has yet to provide guidance on how these two rates should be reported on 2005 tax returns.
2006 Mileage Deduction Rate
Recently, the IRS announced the standard mileage rate for 2006. For business-related travel, the rate is set at 44.5 cents per mile. This rate will be applicable when preparing your 2006 tax return in 2007.
While the IRS’s decision to raise the rate for part of 2005 is commendable, lower gas prices would undoubtedly be more welcome.
You can find the original non-AI version of this article here: Standard Mileage Deduction Rates 2005 and 2006.
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