IRS to increase mileage deductible

Normally the IRS only adjusts the deductible once a year in the fall for the coming year. The special adjustment is directly related to the spike in gas prices in recent months, according to IRS spokesman Jesse Weller.

"Rising gas prices are having a major impact on individual Americans. Given the increase in prices, the IRS is adjusting the standard mileage rates to better reflect the real cost of operating an automobile," IRS Commissioner Doug Shulman said in a statement.

Taxpayers can use the deductible when operating their vehicle for business purposes. The rate is also used as a benchmark by the federal government and many businesses for reimbursing their employees for mileage.

On Tuesday the IRS is also increasing the deductible for medical or moving expenses by 8 cents to 27 cents a mile.

The new rates will be in effect until the end of the year.

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