For the first time since 2011, the IRS has increased the business mileage rate half-way through the year. In the past the IRS has applied different auto mileage rates for the first half and second half of a year to reflect a large change in fuel prices during the tax year. The business mileage rate was increased to $0.625, up from $0.585, and will apply to the period from July 1st to December 31st in an effort to recognize the increasing costs of gasoline this year, whereas the lower rate will apply to the period from January 1st to June 30th.
Businesses or self-employed individuals generally have the option to utilize the Standard Mileage Rate or the Actual Cost method when claiming a tax deduction for business mileage. The Standard Mileage Rate provides a simpler calculation in the event the taxpayer is unable to gather other vehicle information such as repairs, insurance, and depreciation as it only requires that the taxpayer keep track of the total miles driven for the year and the number of those miles that were used for business. Therefore, it is important that the business owners maintain accurate documentation of their business miles and especially now, the date for which the miles occurred as the mileage rate will now be different depending on when the miles were driven.