More Money for Federal Employees Driving Their Own Cars for Business?

IRS has raised the reimbursement rate for the deductible costs of operating a car for business. With the IRS move, GSA is now free to raise the rate for federal employees as well.

Do you remember getting reimbursed at a rate of 48.5 cents per mile when you used your own car for government business?

If you do remember, your memory is still good. Federal employees got a raise in the reimbursement rate on September 1, 2005. The rate went from 40.5 cents per mile to 48.5 cents. (See GSA Raises Mileage Reimbursement Rates)

But, on January 1, 2006, the rate went back down to 44.5 cents per mile.

In a probable precursor to an increase for federal employees who are using their own cars for government business, the IRS has issued the 2007 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

It is back to 48.5 cents–the same as the 48.5 cent rate temporarily imposed during the final months of 2005 when gas prices spiked in the wake of Hurricane Katrina.

Beginning Jan. 1, 2007, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

  • 48.5 cents per mile for business miles driven;
  • 20 cents per mile driven for medical or moving purposes; and
  • 14 cents per mile driven in service to a charitable organization.

The General Services Administration is now free to raise the mileage reimbursement for federal employees and may decide to do so in the near future. You can track the reimbursement rate on the GSA page here.

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 on federal human resources. Follow Ralph on Twitter: @RalphSmith47