WASHINGTON – The Internal Revenue Service (search), recognizing increased gas prices around the country, on Friday increased the mileage reimbursement rate (search) that workers claim when they use personal cars for work.
The decision raised the rate to 48.5 cents a mile for the last four months of the year, after which the tax agency plans to look again at gas prices and reevaluate the rate.
IRS Commissioner Mark Everson (search) said the change reflects that taxpayers should be entitled to a deduction that matches the real cost of operating a vehicle. Many businesses use the IRS rate as a benchmark for reimbursing their employees for travel costs.
The tax agency said the decision to temporarily increase the rate 8 cents in the middle of the year marked the largest single increase on record.
"It's an extraordinary step that we're taking," Everson said.