New 2008 Standard Mileage Rate

This was announced by the IRS today:

This announcement informs taxpayers that the Internal Revenue Service is modifying Rev. Proc. 2007-70, 2007-50 I.R.B. 1162, by revising the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, or moving expense purposes and for determining the reimbursed amount of these expenses that is deemed substantiated. This modification results from recent increases in the price of fuel.

The revised standard mileage rates are:
(1) Business 58.5 cents per mile
(2) Medical and moving 27 cents per mile

The mileage rate that applies to the deduction for charitable contributions is fixed under § 170(i) of the Internal Revenue Code at 14 cents per mile. The revised standard mileage rates set forth in this announcement apply to deductible transportation expenses paid or incurred for business, medical, or moving expense purposes on or after July 1, 2008, and to mileage allowances that are paid both (1) to an employee on or after July 1, 2008, and (2) with respect to transportation expenses paid or incurred by the employee on or after July 1, 2008.

The standard mileage rates set forth in Rev. Proc. 2007-70 continue to apply to deductible transportation expenses paid or incurred for business, medical, or moving expense purposes before July 1, 2008, and to mileage allowances paid (1) to an employee before July 1, 2008, or (2) with respect to transportation expenses paid or incurred by the employee before July 1, 2008. All other provisions of Rev. Proc. 2007-70 remain in effect.

Though any relief is welcome, TaxMiles does not believe that this change is reflective of the actual costs and that Congress needs to continue to look at raising rates further. Not only is the rate not high enough, it is not retroactive as would be Senate Bill s.3032.

We still urge you to contact your U.S. Senator to have the rate raised further.

Senate Bill Proposes Increase in Standard Mileage Rate

Sen. Charles Schumer (D, NY) is once again coming to the aid of small business owners by introducing Senate Bill s.3032 which would increase the standard mileage rate for all of 2008 to 70 cents per mile.

The bill has a proposed act title of "Reimbursing Our American Drivers (ROAD) Act of 2008" and would also raise the rate for charitable miles from 14 to 40 cents per mile.

Taxmiles urges all readers of this blog to contact their U.S. senators to urge passage of this bill which will have a strong benefit to the economy and help keep prices for all goods and services lower. You can find the senator from your state at this web site.

Change never happens in Washington, D.C. unless citizens demand it.

Saving Money on Gasoline

One way to reduce the cost of operating a business vehicle or to decrease fuel expenditures for a fleet is to shop for the best available prices. Gasoline prices at filling stations can vary widely so it pays to know which operators are offering the best deal.

There are web sites that will give you the lastest retail prices at filling stations near your business or home. At GasBuddy.com you can search prices by state, city and even zip code. In my zip code area, for example, the price of gasoline varied from $3.89 to $3.64 per gallon of regular unleaded. Believe it or not, COSCO was not the cheapest price listed.

Of course, it is important to be sure of the quality of gasoline. Some off brands may not provide sufficient octane or may not offer helpful additives. But researching prices can reduce your operating expenses and the internet is an easy way to find the best deals.

Speaking of COSCO, your local branch store may offer one of the lowest available prices. In our case, we use our COSCO issued AMEX card to get an additional 5% discount. At COSCO's current price and including the additional discount, I just paid $3.47 per gallon. With most local filling stations charging about $3.75, and our monthly consumption at 140 gallons, we are saving nearly $40 per month on fuel.