IRS Increases Business Mileage Rate to 51 Cents for 2011

The IRS has announced that the business standard mileage rate for transportation expenses paid or incurred beginning January 1, 2011, will be 51 cents per mile, up from the 50 cents-per-mile rate in effect during 2010 [IR-2010-119, released 12-3-10; www.irs.gov/pub/irs-news/ir-10-119.pdf].

The mileage rate may be used to compute the deductible cost of operating a passenger car (also vans, pickups, or panel trucks) for business purposes. It may also be used by employers that elect to use the “cents-per-mile” valuation method for purposes of determining the amount that needs to be imputed to an employee’s income for personal use of certain company-owned or leased nonluxury vehicles (see The Payroll Source®, p. 3-22).

In addition, the 2011 standard rate for miles driven for medical or moving purposes will increase to 19 cents per mile, up from the 16.5 cents-per-mile rate in effect during 2010.

Finally, the standard mileage rate for operating a passenger car for charitable purposes, which is set by law, will stay at 14 cents per mile in 2011.