The Internal Revenue Service on Jan. 1, 2009, will lower its standard mileage rate to 55 cents per mile—3.5 cents less than the current rate, which the government raised mid-year amid escalating fuel prices.
Many businesses rely on the rate to calculate deductible costs for employees who use personal vehicle for business. IRS, in a special mid-year adjustment beginning July 1, raised the rate by 8 cents to 58.5 cents per mile
(BTNonline, June 24). AAA today reported a national average price for regular unleaded gas of $1.89, significantly lower than the $4.07 national average recorded on the day IRS revised the rate earlier this year.
IRS acknowledged that gasoline costs are "a significant factor" in determining the rate, but other costs, including depreciation, are taken into account. IRS said the standard rate for 2009 factors in a steady decline in oil prices since summer, but also reflect "generally higher transportation costs compared to a year ago."
While not a requirement, most businesses use the IRS rate as a guideline in reimbursing their drivers. In
Business Travel News'2006 Expense Manager's Survey, 82.5 percent of 221 responding travel and expense managers said they used the IRS standard deduction rate to reimburse its travelers.