As the cost of gasoline continues to drop around the nation,
the Internal Revenue Service (IRS) recently announced a slight increase to the optional standard mileage rate used to calculate the deductible costs of using a car, van, pickup or panel truck for business purposes. Beginning on Jan. 1, 2015, the rate will increase 1.5 cents to 57.5 cents per mile driven, up from 56 cents in 2014.
The IRS also decreased the rate for miles driven for medical or moving purposes, from 23.5 cents per mile in 2014 to 23 cents in 2015. The rate for miles driven in service of charitable organizations remains at 14 cents per mile.
According to the IRS, the standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law.
Employers in Pennsylvania should also be aware that, despite the decline in gasoline prices, the new year will bring higher gas taxes. As of January 1st, the Keystone State’s gasoline tax will rise 9.8 cents to 51.6 cents per gallon, one of the highest in the nation. In addition, the Pennsylvania Turnpike will increase tolls by 5 percent.
Though employers are not required to reimburse employees for mileage driven in their personal vehicles while on company business, many do. If an employer chooses to reimburse employees, they may use the IRS standard rate or reimburse at a rate set by the employer. If employees are not offered reimbursement or choose not to request it, they have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates. Special rules may apply to fleet owners (if you use more than four vehicles simultaneously). For more details about your options as an employer, consult your tax adviser.
For more information about any HR issue, contact our HR team by emailing us at hrhelpline@eastcoastrm.com.
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