Mileage Deductibility Rate Increase
When it comes to automobile expense deductions and work related travel you are allowed to chose one of two ways to expense automobile related expenses. The first, and easiest, is the per mile deduction method. You simply track your business related mileage and are allowed to deduct 58.5 cents per mile. The second method, but sometimes more profitable method, is the actual expense deductions. This is when you actually track the expense you’ve accumulated for your car over the year and then allocate a portion of those to business expenses based on your business/personal use ratio. This method is a lot more work and usually not worth the hassle, but if you know your auto may need a lot of maintenance it may be the way to go.
So what’s the good news?
As of July 1, 2008, the optional standard rate to calculate deductible operating costs for business vehicles will rise 8 cents from 50.5 cents a mile to 58.5 cents per mile.
For many people this won’t matter. However, for anyone who has their own small business or uses their personal car for company related travel this is music to our ears. I know 8 cents is not a ton, but every little bit helps. It’s good to see this come as the summer driving begins.
For more details on the rate increase please see this article.
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