On June 23, 2011, the Internal Revenue Service announced an increase in the optional standard mileage rates for the final six months of 2011. The new rate of 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011 is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.
The increase was prompted by gasoline price increases as the IRS usually updates the mileage rates once a year in the fall for the next calendar year.
The optional business standard mileage rate is used to calculate the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a guideline by the federal government and many businesses to reimburse their employees for mileage. The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by law, not by the IRS, and remains at 14 cents a mile.