New per diem rates have been released, effective for business travel on or after October 1, 2005.
The new rate for high-cost localities increased from $204 per day to $226, and the rate for all other U.S. localities increased from $129 to $141. The meal and incidental expense rates increased to $58 for high-cost areas and to $45 for other areas.
The IRS has increased the optional standard mileage rates for the last four months of 2005. For business miles driven between September 1 and December 31, 2005, the rate is increased to 48.5¢ a mile, up from 40.5¢ a mile for the rest of 2005.
The increased rate for the final four months of 2005 for miles driven in a move or for medical services is 22¢ a mile, up from 15¢ for the previous eight months.
Driving for charitable purposes remains deductible at 14¢ a mile, except for driving connected with Hurricane Katrina relief activities. That rate is set at 70% of the business mileage rate through 2006.
Charities are to use the newly released IRS Form 1098-C to report taxpayer contributions of vehicles, boats, and airplanes.
Copy B or C of the form can be given to the taxpayer, providing him or her
with the documentation of the contribution that is required by law.