Mileage rate to stay put until end of year

The government's mileage reimbursement rate -- raised to a record high of 48.5 cents per mile two months ago -- likely will remain the same until January, according to federal officials.

As gas prices skyrocketed after Hurricane Katrina, labor unions and members of Congress called on the Internal Revenue Service to raise the allowable mileage reimbursement rate -- which applies to federal employees who use their personal vehicles on government business -- to as high as 60 cents per mile.

As Congress weighed whether to pass legislation on the issue, the IRS moved on its own, raising the rate to 48.5 cents per mile, eight cents per mile higher than the previous rate, set at the beginning of the year. The move, the IRS said, was "in recognition of the recent gasoline price increases."

At the time, the national average for a gallon of gas had surpassed the $3 mark, up from $2.35 a gallon in early August. But that average price has dropped to $2.48, according to AAA Mid-Atlantic, and some analysts are predicting that in parts of the country, it will drop to $2 a gallon by Thanksgiving.

But despite the falling prices, both the IRS and the General Services Administration, the agency that sets the reimbursement rate for federal employees, plan to leave the rate at 48.5 cents per mile until Jan. 1.

The GSA-set rate generally matches the IRS rate, and by law it cannot be higher than the rate set by the IRS. The GSA rates have kept pace with the IRS rate in recent years.

A GSA spokeswoman said that the agency will reevaluate once the IRS issues a new rate.

IRS spokesman Eric Smith referred to the agency's Sept. 9 rate change announcement, stating that the current rate will remain in effect through the end of the year. Next year's rate has yet to be determined, he said.

"Anything we do would be starting January 1st," Smith said.

The IRS rate is based on a study from the independent contractor Runzheimer International, a Rochester, Wis.-based company that specializes in travel management services and reimbursement programs.

AAA spokesman John Townsend said another mid-year rate adjustment is unnecessary because prices are still "unbelievably high."

"We have to keep in mind that prices are historically high and we are still paying more than we were at this juncture last year," Townsend said.

Source: AAA Mid-Atlantic's Daily Fuel Gauge Report