The Internal Revenue Service (IRS) recently announced an increase in the optional standard mileage rate from 51 cents to 55.5 cents per mile for all business miles driven from July 1, 2011 through December 31, 2011.  This is highest IRS standard rate since the latter part of 2008. www.irs.gov.

Although the IRS typically updates its new rates each fall for the next calendar year, the IRS chose a mid-year increase due to increased gasoline prices, which IRS Commissioner Doug Shulman stated “are having a major impact on individual Americans.”

While gasoline prices are a significant factor in its calculations, the IRS also looks at depreciation, insurance and other fixed and variable costs when setting mileage rates.

Employers using the IRS standard mileage rate to reimburse employees should of course note the increase.

Employers should also take the opportunity to verify each employee driving on company time possesses a current driver’s license and personal auto liability coverage in the amounts required by applicable state law.