This just does not happen every day! According to the USA TODAY, the IRS usually sets the mileage reimbursement rate in the fall for the entire upcoming calendar year. With gas prices surging, they have raised the mileage reimbursement rate to 58.5 cents from 50.5 cents for the second half of 2008 (http://www.usatoday.com/money/perfi/taxes/2008-06-23-mileage-rates_N.htm).

The new rate will apply to miles driven between July 1st and December 31st of 2008. For self-employed individuals as well as owners of small to medium-sized businesses, this can create a huge opportunity to create extra deductions in your business and generate tax free income to yourselves and your employees.

In general, you either deduct your actual vehicle ownership expenses (including depreciation or lease payments) or you reimburse yourself at the allowable IRS rate. This works the same for your employees. We have seen several scenarios where employers and employees have saved significant tax liability by correctly structuring this part of their compensation package.

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