Yes, you'll have to reset your mileage
reimbursement for business driving again. If your
company reimburses employees using the IRS
standard mileage rate for business driving, you
need to adjust the amount to 44.5" per mile,
effective January 1, 2006. Reimbursements
exceeding that rate will be taxable income to your
employees, and payroll taxes are due on he excess
amount.
Mileage rates are usually adjusted just once a
year. However, the steep increase in gas prices
last fall caused the IRS to raise the mileage rate
for business driving from 40.5" a mile to 48.5" a
mile for the last four months of 2005.
That higher rate was adjusted downward with the
recent decrease in fuel costs. Also lowered was
the mileage rate for driving in a job-related move
or to obtain medical services. For the first eight
months of 2005, that rate was 15" a mile. For
September through December of 2005, it increased
to 22" a mile. Effective January 1, 2006, it is
lowered to 18" a mile.
If you need additional information on mileage
rates or other vehicle deductions, give us a call.
