It will cost you less at the pump to fill your car next year. The U.S. Department of Energy has issued its predictions for the price of gasoline for 2015 and the numbers are the lowest full-year average since 2009. Gas prices are expected to drop 35 cents to $2.60 a gallon.
The national average price for regular unleaded gasoline could bottom out at $2.50 by Christmas. Average costs across the country are dropping from week to week: as of today, they are just $2.67 per gallon, the least expensive since February 23, 2010.
Despite those tumbles, the standard mileage rate for federal income taxes is going up for business miles.
The Internal Revenue Service (IRS) has issued the 2015 optional standard mileage rates and beginning on January 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
• 57.5 cents per mile for business miles driven (up from 56 cents in 2014)
• 23 cents per mile driven for medical or moving purposes (down half a cent from 2014)
• 14 cents per mile driven in service of charitable organizations (fixed by Congress, never adjusted for inflation)
If you’re wondering about the difference in the rates for business and medical or moving purposes, there’s a reason: the standard mileage rate for business is calculated using an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil while the rate for medical and moving purposes is based on the variable costs, such as gas and oil. That also explains why the rate for medical or moving purposes has dipped while the rate for business has gone up. Inflation is edging costs – other than gas – up a tiny bit.
The optional standard mileage rates are used to easily calculate the amount of a deductible business, moving, medical or charitable expense (miles driven times the applicable rate). Taxpayers always have the option of deducting their actual costs rather than using the standard mileage rates – though admittedly, that’s a lot more work.
Be careful: these rates go into effect at the beginning of 2015 for the 2015 calendar year. That means they’ll show up on your 2015 returns (the ones you’ll file in 2016). You’ll use the 2014 rates for the return that you’ll submit in 2015.
