Tuesday, March 06, 2007

Standard Mileage Deduction Rates - 2005 and 2006

If you’re inch business, you’re interested in the Internal Revenue Service mileage tax deduction rates. The 2005 rates fluctuated because of high gas terms and now the 2006 rates have got been released.

Standard Mileage Tax Deduction – 2005

In a move not seen for some time, the Internal Revenue Service actually issued two different mileage tax deduction rates in 2005. Mileage tax tax deduction rates are the dollar value per business mile traveled that you can claim as a deduction. For instance, if you traveled 1,000 miles in your vehicle on business in 2005, you can tax tax deduction 1,000 multiplied by the designated rate.

For the first eight calendar months of 2005, the criterion mileage deduction rate was 40.5 cents a mile. Using our former example, a individual who drove 1,000 business miles in the first calendar calendar months of 2005 would be able to subtract $405.

As we all know, gas terms went through the roof in the last four months of the year. In a enormous move, the Internal Revenue Service raised the criterion mileage tax deduction to 48.5 cents for business miles undertaken from September through December. This compares to a tax deduction of $485 using our example.

This increased rate only uses to the clip time period of September through December. It makes not retroactively apply to the first eight calendar months of the year. The Internal Revenue Service have not issued any directions regarding how the two different rates will be noted on 2005 tax returns.

Standard Mileage Tax Deduction – 2006

This past week, the Internal Revenue Service issued the criterion mileage rates for the 2006 year. The new rate for standard business mileage will be 44.5 cent per mile. This rate should be used when you set up your tax tax return for the 2006 year, to wit, in 2007.

The Internal Revenue Service should be applauded for raising the criterion mileage rate for the last four calendar months of 2005. Still, I am certain we would all prefer lower gas prices.

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