The Internal Revenue Service today issued a 2007 allowable vehicle reimbursement rate of 48.5 cents per mile, despite a moderation in gas prices compared with the volatile post-Hurricane Katrina prices of a year ago.
The 2007 rate is an increase from the 2006 rate of 44.5 cents per mile. It also is back on the same level as the rate enacted in September 2005, a rare midyear adjustment to accommodate for the surging fuel costs following Katrina
(BTNonline, Sept. 12, 2005). The higher rate this year stems from overall higher prices for vehicles and fuel for the year ending in October, according to the IRS.
Not counting the drop in 2006, following the post-Katrina adjustment, IRS mileage rates have climbed continually over the past few years. The rate was 40.5 cents per mile in 2005 and was 37.5 cents in 2004.
Although it is not mandatory for companies to follow the IRS safe-harbor rate, most use it as guidance for reimbursement of employees using personal vehicles for business travel. More than 80 percent of 171 respondents in
Business Travel News' third annual Expense Managers Survey said they used the 2006 rate of 44.5 cents for reimbursement.