As anyone with a driver’s license and a gas credit card know, the cost of gas has gone up rapidly this year. The price of regular gas is now above $4.00 in some locations around the country. According to the American Automobile Association, the cost of gas has gone up 37% in the past year.
And, if you are using your own car for government business, you get reimbursed for each mile you drive. But what happens when the price of gas goes up?
Usually, the mileage reimbursement rate goes up once a year–or at least it is reviewed once a year. Federal employees usually get the same reimbursement rate as that allowed by the Internal Revenue Service for taxpayers who use their cars for business. That current rate of reimbursement for federal employees which was set in March 2008, is 50.5 cents per mile. That figure was up from the 48.5 cents per mile set in February 2007. For the sake of comparison, a federal employee was reimbursed at a rate of 32.5 cents per mile back in 2000.
The Internal Revenue Service has just announced that it is raising the mileage reimbursement rate to 58.5 cents per mile. The new rate will apply from July 1, 2008 – December 31, 2008. The old rate will still apply for any miles driven earlier this year.
So what does that mean for federal employees?
Your reimbursement rate does not automatically change. The General Services Administration (GSA) sets the reimbursement rate for federal employees. As noted on the GSA website: “By Law, GSA is responsible for reviewing the privately owned vehicle mileage reimbursement mileage rate on a yearly basis. However, by law, GSA may not exceed the standard mileage reimbursement rate for a privately owned automobile (POA) established by the Internal Revenue Service (IRS).”
It is likely that GSA will follow the IRS action and increase the mileage reimbursement rate for federal employees. They may even do it on or before July 1st to match the IRS action. But the agency does not have to follow the IRS decision.
If you are using your own car for government business, you may want to check it occasionally to see if your expense check may be going up–along with your monthly gas bill. And, if you are driving a large SUV to carry yourself and your equipment around, keep in mind that the value of your vehicle has dropped about as fast as the cost of filling your gas tank has gone up. Even with a larger reimbursement for your daily mileage, it probably won’t cover the loss in the value of your car but no doubt the extra money would help.
If, and when, GSA takes action to increase the mileage reimbursement rate, we will let readers know.