A Variable Business Mileage Deduction

December 22, 2008
Special Feature

When you use a vehicle in your medical practice, you can choose either of two ways to deduct your expenses. You can keep track of your actual costs for gasoline, maintenance, and other expenses, or you can use the standard mileage rate set by the IRS. Most taxpayers opt to use the IRS standard rate.

When you use a vehicle in your medical practice, you can choose either of two ways to deduct your expenses. You can keep track of your actual costs for gasoline, maintenance, and other expenses, or you can use the standard mileage rate set by the IRS. Most taxpayers opt to use the IRS standard rate.

Hopefully you kept good records of how many miles you clocked, because in 2008, there’s a two-tier deduction allowance. For miles driven in the first half of the year, the mileage rate is 50.5¢ a mile. For miles driven in the second half, the rate jumps to 58.5¢ a mile, reflecting the leap in gasoline prices to $4 a gallon and more. Similarly, the deduction for mileage driven for moving or for medical reasons went from 19¢ a mile in the first half of the year to 27¢ a mile in the second half.

The IRS recently announced that standard mileage rates for 2009 will be lower than in the second half of 2008, partially in response to the steep drop in the price of gasoline. The business mileage rate will be 55¢ a mile next year and the medical mileage rate will be 24¢ a mile. The rate for miles driven in the course of doing charitable work, which is set by law rather than by the IRS, will stay at 14¢ a mile, the same as this year.