Mileage reimbursement rate could drop by 4 cents

Federal workers could see a 4-cent-per-mile drop in the mileage reimbursement rate starting in January if the General Services Administration follows the Internal Revenue Service's lead.

The IRS recently announced that rates for cars, vans and pickup trucks will drop from 48.5 cents per mile to 44.5 cents per mile, effective Jan. 1, 2006.

Mileage reimbursement rates for federal employees using their personal vehicles on government business 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. If adopted by GSA, the 44.5-cent rate would still exceed the 2004 reimbursement level. After the gas price spike in September, the IRS made a special one-time adjustment in the mileage rate from 40.5 cents per mile to 48.5 cents per mile. GSA followed suit less than a week later.

"The IRS took the extraordinary step of temporarily increasing the standard mileage rates in the aftermath of Hurricane Katrina," IRS Commissioner Mark Everson said in a statement. "We promised to continue closely monitoring the situation. The 2006 mileage rates reflect that gas prices have dropped."

Independent contractor Runzheimer International, a Rochester, Wis.-based company that specializes in travel management services and reimbursement programs, conducted the study that determined the new IRS rate. The company reviewed 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 they obtain permission from their agency. The reimbursement rates apply only to the authorized means of travel.

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

The below chart shows the mileage rates adopted by GSA over the last decade.

Source: General Services Administration