Mileage Rates Increased to 58.5 cents, Starting July 1

The IRS has increased its allowable mileage rates to 58.5 cents for the second half of 2008. Starting today, your business auto travel can be deducted at 58.5 cents a mile. Of course, this adjustment by the IRS is in reaction to the increases in the prices of gasoline. The rate for business travel during the first half of 2008 (January 1 through June 30) is still 50.5 cents a mile.

"Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile," said IRS Commissioner Doug Shulman. "We want the reimbursement rate to be fair to taxpayers."

The easiest way to determine this deduction is to keep track of miles traveled and multiply by the standard deduction. This year, you will need to separate Jan-June from July-December trips.