IRS Sets 2005 Standard Mileage Rates

As of Jan. 1, 2005, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) are:

• 40.5 cents a mile for all business miles driven, up from 37.5 cents a mile in 2004;
• 15 cents a mile when computing deductible medical or moving expenses, up from 14 cents a mile in 2004; and
• 14 cents a mile when giving services to a charitable organization.

The three-cent increase in the business mileage rate was the largest one-year rise ever. The primary reasons were higher prices for vehicles and fuel during the year ending in September. The charitable standard mileage rate is set by law.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire, or for more than four vehicles used simultaneously. Revenue Procedure 2004-64 contains additional information on these standard mileage rates.

For more information, visit www.irs.gov.