2006 Mileage Deductions 

You can deduct for business transportation using your car, at a flat rate per mile. With gas prices currently below 2005 peaks, IRS has decreased the rate. The per-mile rate of 48½¢ for September 1 through December 31, 2005 is reduced to 44 ½¢ for 2006 business driving.

Employers who reimburse employee business driving expenses can use these rates. The employer can deduct reimbursement at these rates, and the employee pays no tax on the reimbursement, if the employee substantiates time, place, business purpose and mileage for each trip.

Note: The flat rate covers all expenses for maintenance, but you can deduct related tolls and parking fees in addition. Using the flat rate is optional. You can instead deduct specific expenses for gas, oil, insurance, upkeep, repairs, depreciation or lease payments, registration and other cost elements (including tolls and parking), to the extent allocable to business use.


TIP: Deducting specific expenses, though less convenient, could give a larger deduction—for example, where the vehicle is a gas guzzler.


The mileage rate for medical transportation (to and from doctors, etc.), which was 22¢ for September 1—December 31, 2005, is cut to 18¢ for driving in 2006. The rate for charity-related volunteer driving is fixed by statute at 14¢ a mile, but special, higher, rates are available for driving serving charities offering Hurricane Katrina-related relief. For these Katrina rates, click here.

Note: The rates for driving during January 1—August 31, 2005 were 40 ½¢ per mile for business driving, 15¢ per mile for medical and 14¢ per mile for charity.