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IRS Increases Standard Mileage Rate
How Can You Manage This Cost?

Frank L. Festi, Jr.
Dec 5, 2012

The IRS recently announced the standard mileage rates for 2013. Starting on January 1, standard mileage rates will be:

  • 56.5 cents per mile for business
  • 24 cents per mile for medical or moving
  • 14 cents per mile for charities

Business and medical and moving rates are up one cent per mile for 2013 while the charitable rate, which is set by statute, remains the same.

If you pay a substantial amount in mileage reimbursements, your burden might become even greater. Here are some cost-saving tips.

Consider pool cars – If your employees regularly drive long distances and make overnight trips, you may benefit from a pool of cars that available for staff use. These purchased or leased cars are made available to employees for business use. Considering the high initial investment, buying or leasing cars may seem more expensive than paying mileage; but on a per mile basis, the costs of buying or leasing cars are often less than the standard mileage rate. We actually noticed a substantial savings in our own business when we starting using pool cars.

Opt for rentals – For businesses that have only sporadic travel, pool cars might be too much of an up-front investment. Thankfully, using rental cars can result in almost the same level of savings, but with a lower barrier to entry. Rental cars might seem expensive, but many people don’t know that often a rental’s cost per mile is less than the business mileage rate. If you have an employee who’s going to be taking a long trip, consider furnishing that employee with a rental car. Depending on the cost of the rental and the length of the trip, your business could see real savings.

Think about gas cards – Gas cards don’t cut down on mileage reimbursements directly, but when used in combination with pool or rental cars, they can result in additional savings. Many gas station chains offer credit cards that include a discount, sometimes up to 5 percent, on fuel purchases. Stations offer standard credit cards which come with special fuel discounts and also fleet cards, which give business owners more control of which purchases can be made on the card and offer additional reporting information.

Encourage carpooling – If you have two employees who are going to the same place, it doesn’t make sense to pay the mileage twice. Encourage employees to carpool whenever possible.

Interested in learning more about these cost saving measures? Contact your Rea associate – we’ll be happy to tell you about Rea’s experience with pool and rental cars and how you can apply what we’ve learned to your business.

This article was originally published in Illuminations: Facts & Figures from people with a brighter way, a Rea & Associates enewsletter, 12/5/2012.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.

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