Effective January 1, 2009 the IRS has decreased the standard mileage rate for the business (ministry) use of vehicles due to the declining prices of gasoline. The rate will decrease from 58.5 cents per mile to 55 cents per mile.

The standard mileage rate is significant for two reasons. First of all, it is the maximum rate that ministries can reimburse employees for ministry related mileage under an IRS approved Accountable Plan without having to report the reimbursement on the employee’s W-2.

Secondly, it is the amount an employee or a self-employed person can deduct on his or her tax return for unreimbursed ministry mileage if they choose the standard method (in contrast to using the actual cost method).

It is not mandatory that a ministry increase their reimbursement rate to equal the IRS rate. This could occur if the ministry’s budget could not sustain an increase. As long as a ministry does  not exceed the established IRS rate (now at 58.5 cents per mile), then they are not required to report the reimbursement on the employees W-2 at year end assuming all of the other requirements are met for an Accountable Plan.

Other deductible rates per mile (effective 1/1/09)
Medical       24 cents (from 27 cents)
Moving        24 cents (from 27 cents)
Charitable   14 cents  (no change)