More Money in Your Paycheck But Less for Mileage

By on December 8, 2005 in Current Events with 0 Comments

While it is common for federal employee benefits to stay the same, it’s not often that a benefit goes down.

Here is one benefit that is about to go down though: The mileage rate for use of privately owned vehicles used for government business.

At first glance, that seems hard to believe. Gas prices have been shooting up throughout the year. But, as some have noticed, prices started declining a few weeks ago.

The Internal Revenue Service has noticed. In fact, the IRS was probably expecting prices to go down. When the agency raised the mileage rates in September, it stated in its press release that the increase was temporary until December 31, 2005. So, while it is unusual, the rate will be headed down.

On September 1st, the mileage rate went from 40.5 cents per mile to 48.5 cents per mile. But, beginning on January 1, 2006, the rate will drop back to 44.5 cents per mile. The IRS has dropped the mileage rate applicable to taxpayers. “The IRS took the extraordinary step of temporarily increasing the standard mileage rates in the aftermath of Hurricane Katrina,” IRS Commissioner Mark W. Everson said. “We promised to continue closely monitoring the situation. The 2006 mileage rates reflect that gas prices have dropped.”

The rates for federal employees are set by the General Services Administration. The GSA rates usually follow the IRS rate for taxpayers and it cannot be higher than the rate set by the IRS. Here is the GSA page showing current and historical mileage rates.

So, as of January 1st, federal employees who are authorized to use their own vehicles for government business will be getting a smaller reimbursement. But, looking at the bright side, readers are paying less for gas and will be getting an average 3.1% raise to make up for some of the difference.

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.