Recognizing that the sky rocketing gas prices may be making driving more expensive, the IRS has dramatically increased the standard mileage rate for business miles.
When calculating deductions for business auto use, taxpayers can use either actual expenses, or the standard mileage rate. The mileage rate takes into consideration not only fuel prices, but maintenance and depreciation. Many taxpayers prefer using the standard mileage rate because it simplifies record keeping.
The standard mileage rate is usually adjusted for inflation at the beginning of the year. However, because of high gas prices the IRS has done a mid-year adjustment. Beginning July 1, 2008 taxpayers can deduct 58.5 cents per business mile, up from 50.5 cents per mile.
Taxpayers are also allowed to deduct mileage expenses related to moving, medical expenses, and charitable work. Apparently cars cost less to drive if you are driving for charity, medical care or moving. Medical and moving miles can be deducted at 27 cents per mile, charitable miles are only worth a 14 cents per mile deduction.
You can find out more at the IRS Website.