IRS Pumps Up the Savings

Rocketing gas prices this year have prompted the Internal Revenue Service to increase the standard mileage-rate deduction for qualifying business-related driving expenses by 8 cents per mile. This means that the rate in effect for the first half of 2008 (January 1 to June 30), which is 50.5 cents, will jump to 58.5 cents for the second half of the year (July 1 to December 31) - that's almost 16%!

Normally the IRS updates this rate only once a year in the fall for the next calendar year. That means this is the first special mid-year increase since 2005 when gasoline prices spiked after Hurricane Katrina. And while an additional 8 cents a mile may not seem like much, it can really add up over a six-month period, so it is definitely worth it to keep accurate records for your 2008 tax return. If you're not sure how this new deduction affects your business, give us a call. We work with some great CPAs and tax preparers in our community and will gladly refer you to someone you can trust.