Mileage reimbursement rate could rise by 3 cents in 2005

Federal workers might see a 3 cent-per-mile increase in the mileage reimbursement rate if the General Services Administration follows the Internal Revenue Service's recently announced rate change, effective Jan. 1, 2005.

The IRS rate change from 37.5 cents to 40.5 cents a mile for cars, vans and pickup trucks is one of the largest one-year increases ever. According to the IRS, the higher cost for vehicles and fuel during the year ending in September is the primary reasons for the rate jump.

The most recent GSA increase in the reimbursement rate was a 1.5 cent increase on Jan. 1, 2004, that mirrored a previously announced IRS increase.

Federal employee mileage reimbursement rates are based on data collected by GSA and usually published in the Federal Register in January. The governmentwide rate generally matches the annual rate set by the IRS and by law (41 CRF part 301-10), it cannot be higher than the rate set by the IRS. In recent years, GSA rates have kept pace with the IRS' rate.

An independent contractor, Runzheimer International, conducted the IRS study that determined its new rate. The study examined the costs of operating a vehicle, including gas prices, oil, tires and scheduled maintenance.

According to federal travel regulations, employees may use personal vehicles for official travel if approved by their agency. If an agency authorizes travel by other means, such as travel by air, and employees drive their own cars instead, reimbursement rates are limited to the cost of the authorized means of travel.

The mileage reimbursement rate does not apply to employee relocations. Transfers, or relocations, are designated as a transportation expense, not as an allowance for the cost and operation of the vehicle, according to GSA.

Source: General Services Administration