Fuel Prices

If the price of oil and gasoline continue to rise, we would expect the standard mileage rate to be adjusted upward sometime this year. It would hold that since businesses utilizing the expense deduction method would realize a tax savings proportional to their operational costs, the IRS should extend that same consideration to those that employ the standard mileage rate.

This is not a novel idea. The same was done in 2005 and we urge that Congress immediately look into this issue. The self-employed and other small business owners are being hit much harder by this tax disparity since most of them use the standard mileage deduction.

It is estimated that each one dollar rise in the cost of a barrell of oil results in a 2.4 cent increase in the price of a gallon of gasoline. It is no wonder then that fuel has become so much more expensive. Oil prices, which are directly affected by demand and speculation combined with other government energy policies and world issues, do not look to decrease soon.

For more information on this subject we recommend the following news articles and web sites:


1. http://www.wtrg.com/ Analysis, planning, forecast and data services for energy producers and consumers.
2. http://www.philly.com/philly/business/20080425_Gas_prices_climb__crude_falls.html Gas prices climb; crude falls
3. http://www.financialpost.com/most_popular/story.html?id=469214 Gas, oil prices to double by 2012, CIBC economist predicts
4. http://www.mileagebooks.com Meanwhile, get a mileage log to maximize your tax deductions

2008 Standard Mileage Rate

The IRS standard mileage rate for the current tax year is 50.5 cents per mile. Miles driven for medical purposes or moving are deductible at 19 cents per mile while mileage incurred for charitable organizations are deductible at 14 cents per mile.

If oil prices continue to rise (all indications are that gasoline prices will remain high), the U.S. Congress may promote a mid year rate adjustment as was instituted in 2005. Check back with this blog for updates regarding mileage rates.

Mileage rates for previous tax years (back through 2003) are available at: http://www.mileagebooks.com/IRS-Tax-Regulations/IRS-Tax-Regulations/Current-Standard-Mileage-Rate.

This is Your Forum

Welcome to Business Mileage Report moderated by me, TaxMiles. All comments and questions from readers about business vehicle expenses and related tax issues are welcome.

This blog will serve as a forum where business owners and professionals can come to learn more about how expenses for their cars, trucks, vans, and other vehicles can affect their tax situations. If I can't answer your questions, hopefully one of our readers can. That is why comments are open to everyone (though I will moderate postings to ensure that they are relevant and appropriate).

I have been studying this subject since 1991 and have a lot of insight as to the various ways that businesses can manage their vehicle costs for the greatest tax benefit. Be advised that I don't believe in cheating on taxes. Promotion of illegal schemes will not be tolerated in the comments sections of this blog. However, please feel free to link to your web site if you have certain expertise that other folks might find valuable.

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