Mileage Reimbursement Rate May Drop

The IRS has said the mileage rate that is deductible for tax purposes will drop in 2006 to 44.5 cents per mile from the current 48.5 cents per mile, a possible forerunner to a corresponding drop in the reimbursement rate the government pays to federal employees who use their own vehicles on official business. The government mileage rate is set by the General Services Administration, which generally follows the IRS’s figure on the rate. The lowered rate reflects lower gasoline prices since the rate was last changed, in September, when it rose from the 40.5 cents per mile rate that had applied in the first eight months of this year. The mileage rate typically applies for an entire year.