does anyone know the formula used that the irs uses to calculate the standard tax deduction for mileage? how about the mpg they use in their calculations? I know they hire this out, but it should be available under the freedom of information act. i thought it would be easier to find than it has been.
Are you asking for the basis of the personal milage allowance (currently $0.485/mile)? I believe that number is generated periodically by the GAO and published in a report. I do not know if they also publish the methods they use to calculate it, I would assume that is also public information.
I just found something interesting, it looks like the rate has increased to $0.505 for 2008, I didn’t know that:
I found a little more info:
no. the .485 is the end result. I know they use things like maintenance cost, fuel cost, insurance and depreciation in their calculations. Somewhere they have to quantify those items and use an average. there would be a lot of data fed into the equation and that is contracted out. i even found the group that does the work. however, I have not been able to locate the rationale. Depreciation is a large portion of the standard mileage deduction. some percentage is cost of fuel per mile based upon an average price for fuel for a given mpg rate. that MPG rate is what i am seeking. thanks for the help so far. If i have to, I can subimt for the information but who knows how long I will have to wait. when I began to search for the information, i thought I would be able to find it with all of the forums on cars and on taxes. I even thought i would find it in the code of federal regulations. If I find it , I will post it.
Just curious what you are trying to do with this info?
“no. the .485 is the end result.”
According to the IRS website, the 2008 rate is $0.505:
I hope that’s correct, I need to drive about 5000 miles later this month.
Just in case it will help you search, I think that the POV mileage rate for US Goverenment travel was always the same as the IRS alloowance for charity deductions on 1040 Schedule A. I think the rules are called Federal Travel Regulations. And I doubt that they explain how they get the number.
Actually, the POV rate for charity ($0.14) is lower than the U.S. government travel rate ($0.505). The IRS “untaxed” limit for reimbursed employee business POV travel is the same as the U.S. government employee travel rate.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile; the standard rate for medical and moving purposes is based on the variable costs as determined by the same study. Runzheimer International, an independent contractor, conducted the study for the IRS.
You could contact Runzheimer http://www.runzheimer.com/company/mobility-about-us.aspx and see if they will share their information with you.
Oops! Or, maybe, Duh! That’s what I was thinking of. Thanks for the correction.
I very much doubt a contractor is going to discuss work they performed for a government agency with a member of the public. They will most likely just refer you back to the IRS. I would just contact the IRS if I wanted to know.
They probably wouldn’t divulge the proprietary “formula” the OP wants. But they might give an overview of the type of data the collect for their study.
I very much doubt that you’d ever get a straight answer from the IRS.
How does Runzheimer come up with its magic rates?
The formula is something of a trade secret, but a company spokesman listed these components: Fuel costs, vehicle depreciation, maintenance, tires, fixed costs, such as insurance and vehicle registration. Runzheimer uses daily costs incurred by typical drivers based on various vehicle histories throughout the nation provided by the IRS, spokesman Ted Schuerman said.
No one says the system is perfect. Using national averages, for example, breeds regional inequities because driving conditions and costs, like insurance premiums, vary widely from state to state. /quote
The IRS, as usual, is tight-lipped:
While the IRS does not comment publicly on the input it receives on issues affecting tax administration, an agency spokesman said the fall of 2005 was an unusual period in the aftermath of Hurricane Katrina, “so we took the extraordinary step of adjusting mileage rates midyear.” GSA referred questions to the IRS, which would have to move first to boost the rate.
What I find curious is the quote by Ted Schuerman. Runzheimer uses data provided by the IRS. Where does the IRS get this data? Why, probably from the tax returns of people that itemize their vehicle expenses in lieu of taking the standard mileage rate.
I suspect that data is, well, suspect given that some people stretch the truth on their tax returns…
Taxes for Dummies might tell you.