ROCHESTER, Wis. (Dec. 19, 2000) — The Internal Revenue Service, effective Jan. 1, will begin allowing taxpayers to deduct 34.5 cents per mile for business-related auto expenses, according to Runzheimer International, a management consulting firm.
The standard mileage rate is a national average used by taxpayers as a "safe harbor" in lieu of actual expense amounts, the Rochester-based company said. The previous rate allowed by the IRS was 32.5 cents.
Runzheimer said it recommended the increased rate to the IRS largely on the basis of what it called "the dramatic climb in gasoline prices" over the past year.
In calculating average per-mile expense, the company said it considered such variable costs as fuel, oil, tires and vehicle maintenance as well as fixed costs such as insurance, license and registration fees and depreciation.
Adlore Chaudier, vice president of government services for Runzheimer, said modestly higher new vehicle prices and, therefore, somewhat greater annual depreciation costs, also were other driving forces behind the increase.
In part, this is due to pickups and sport-utility vehicles continuing to gain a larger market share, while automobiles—especially subcompacts and compacts—continue to decrease proportionally, he said.
"These vehicles typically cost more than your average passenger car, hence higher depreciation rates. They also are less fuel efficient, which also contributes to the impact of higher fuel prices," he added.