The rising cost of gasoline has spurred the IRS to increase the optional standard mileage rate deduction for business use of a car to 48.5 cents per mile from September 1 through December 31 of 2005. This new rate is an 8 cent increase over the 40.5 cent rate in effect from January 1 to August 31, 2005. The September increase was unusual occurence. Normally,the IRS updates the mileage rates once a year in the fall for the next calendar year.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of the extra burden of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

For more information see the IRS press release.