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The IRS announced an increase in the optional standard mileage rates for the final six months of 2011. Effective July 1, 2011, through December 31, 2011, the rate will increase to 55.5 cents a mile for all business miles driven. This special adjustment was made in recognition of recent gasoline price increases. The IRS normally updates the mileage rates once a year in the fall for the next calendar year. The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

Employers who reimburse for mileage based on the IRS rate should be prepared for the increase. The rate used for mileage reimbursement is not mandatory and employers can choose to reimburse employees for mileage at a different rate. It is best to be clear with your employees as to the amount per mile for which they will be reimbursed. Employers should review their company’s policies to determine if any changes are necessary or desired.

If you have any questions regarding employee policies and preventing employment litigation, you may contact Judith Sadler at 713-877-8111 or by email at jsadler@sadlersykes.com.

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