IRS lowers mileage deduction rates to 50 cents

The Internal Revenue Service is lowering mileage rates from 55 cents per mile to 50 cents per mile starting Jan. 1. The rates are used by businesses to deduct the cost of employees operating automobiles and by employees who turn in expense reports for travel, meetings and sales calls.

The IRS said on Dec. 3 it is cutting the mileage rates because gasoline prices are lower than in 2008 when they spiked at more than $4 per gallon. In June 2008, the IRS took mileage rates from 50.5 cents per mile to 58.5 cents per mile. Gasoline hit a record average of $4.11 per gallon in the U.S. in July 2008, according to AAA.

In January 2009, the IRS took the rates down to 55 cents per mile. The economic slowdown took the wind out of crude oil prices and gas prices stood at $1.80 per gallon in December 2008. Gasoline prices in the U.S. now stand at $2.63 per gallon and average $3.36 per gallon in Hawaii, according to AAA.