IRS Increases 2005 Per-Mile Driving Rate to 40.5 Cents, Highest in Recent Years

November 17, 2004

The Internal Revenue Service has announced the national per-mile business driving rate of 40.5 cents for the U.S. taxpayer, effective January 1, 2005. The rate for 2004 was 37.5 cents.

This standard was recommended to the IRS by Runzheimer International, the Rochester, Wisconsin-based management consulting firm specializing in vehicle, travel, and living costs, which has provided this service since 1980. The 40.5 cents-per-mile standard is the amount the U.S. taxpayer can deduct for vehicle expenses on his or her 2005 tax return for business miles driven.

"To a large extent, the increase in total cost can be directly attributed to both an increase in annual vehicle cost and increasing fuel costs," notes Ted Schuerman, Director of Research & Client Service within Government Services at Runzheimer International. "Although fuel costs spiked to their highest point of the year nationally in June 2004, gasoline prices represented only part of the increase," Mr. Schuerman adds. "Perhaps most surprising is the continued trend towards the purchase of large, low fuel-efficiency vehicles despite rising fuel costs."
"Another cost influencing the cents-per-mile increase is a rise in the cost of automobile insurance," states the vehicle cost expert. Other components such as vehicle maintenance costs have shown only slight increases, while tire replacements and registration costs remained relatively stable.

Runzheimer International is a leading provider of employee mobility services, serving 60 percent of the Fortune 500. Founded in 1933, Runzheimer specializes in cost-of-living information and employee reimbursement programs relating to business vehicles, relocation, and travel.

For more information, contact Luella Dooley at Runzheimer International, Runzheimer Park, Rochester, Wisconsin 53167, (262)971-2277, ljd@runzheimer.com, www.runzheimer.com.