The Internal Revenue Service offers new optional standard mileage rates to use for 2005 in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. Beginning Jan. 1, 2005, the standard mileage rates for the use of a car (including vans, pickups, or panel trucks) will change.
The 3-cent increase in the business mileage rate is the largest one-year rise ever. The primary reason was 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. For additional information on these mileage rates, review Revenue Procedure 2004-64 at www.irs.gov.
