Home
>
Tax
>
Small Businesses: Company Car Vs. Personal Mileage Reimbursement In Hurricane Katrinas Wake

Small Businesses: Company Car Vs. Personal Mileage Reimbursement In Hurricane Katrinas Wake

With gas prices at an all time high before Hurricane Katrina left her mark on our nation, most Americans were hoping that gas prices would settle down once summer passed. But gas prices have jumped as much as 80 cents a gallon across the country once Hurricane Katrina destroyed the Gulf Coast and impacted all of our lives.

While Hurricane Katrina is a horrible tragedy, it's not just affecting the Big Easy. Hurricane Katrina will impact every single American that commutes to work, takes a vacation, or shops online.

Company Car vs. Mileage Allowance

Companies and individuals alike are now concerned that the federal mileage deduction or their company's gas mileage reimbursement will no longer cover the costs of operating a vehicle for business purposes.

At the beginning of 2005, the IRS standard federal mileage reimbursement rate for business use of a personal vehicle (including vans, pickups or panel trucks) was 40.5 cents a mile for all business miles driven, up 3 cents from 37.5 cents a mile in 2004; The primary reason for the increase was higher prices of vehicles and fuel in 2004.

Christopher Tanis, District Manager of a restaurant chain in New York State travels for business to 5 different stores per week. For him, the 2005 federal reimbursement rate worked out quite well, and he opted for using his personal vehicle instead of using a company car. Now that fuel costs are so high, he's decided to re-examine the financial feasibility of mileage reimbursement.

Poor Gas Mileage Cars are Losing Value

Chris Brown; owner of Auddie Brown Superstore, an automobile dealership located in Florence, South Carolina, commented "I think [the jump in gas prices resulting from Hurricane Katrina] is ridiculous because they act like we're running out of fuel and we've got plenty."

Selling cars, the standard expense for selling each vehicle used to include a full tank of fuel when they bought a car, once the price hit $2.50 a gallon, Chris starting limiting his fuel allowance to $10. Chris explains, "Some cars take $80 worth of fuel to fill up and on a new car we're lucky if we make $80 in profit on them -- especially the new cars. Our new car profit margin is at its lowest ever. At this point we're just glad to sell the car and bring in some inventory."

Now that gas prices have gone through the roof, small business owners are working furiously to dump those 6,000 pound gross vehicle weight fuel guzzlers they bought only a year or two previously under a tax loophole which allowed small businesses to write-off most of vehicle cost in one year.

Mr. Brown has experienced this situation on a larger scale than most of us, adding "People come in to trade their larger trucks and SUV's with poor gas mileage for smaller, better gas mileage vehicles. Most consumers are not only so upside-down (owing more on the car than its fair market value) but are finding it hard to trade-in these larger vehicles. Not only they are valued less because of gas prices but people just cannot afford the fuel that would be needed to maintain these lower gas mileage vehicles."

Weighing your Options

You, too, may have to analyze your business vehicle deduction options, now that high fuel prices seem like they're here to stay. You may find that while maintaining a mileage log and claiming a car deduction or mileage allowance isn't right for your situation, the IRS will allow you to deduct actual vehicle expenses based on the percentage of business vs. personal miles. For those who use their vehicle mostly for business, minimal personal usage combined with the burden of record-keeping may justify a company car. There's no right answer for everyone. Literally, your mileage may vary. Consider your options and you'll find the way to steer yourself to the best tax advantages in these new circumstances.

Ann-Marie Patero is a freelance writer for business vehicle deduction, publisher of Consulting Mentor, a website providing business vehicle deduction to Consultants world wide. If you're a consultant, freelancer, or considering starting your own small business, the resources at Consulting Mentor will help you improve your effectiveness, profitability, and overall success.

recurring maid service Buffalo Grove ..

In The News:

The iconic Mary Kay pink Cadillac goes electric with the Cadillac Optiq, available only to the company's top 1% of sales force performers.

Cybercriminals abuse trusted Intel driver to gain kernel access and shut down Windows Defender, enabling undetected malware deployment since July 2025.

Using email aliases for online shopping and subscriptions can protect your privacy by preventing companies from linking your activity across websites.

New research shows AI overlap does not equal job replacement, with knowledge-based roles seeing most integration while physical jobs remain least affected.

Scammers target seniors who avoid social media by exploiting public records like obituaries and real estate filings to steal personal information and money

Recovery team in Italy use AI-enabled drones to detect missing hiker's red helmet, leading to successful recovery after months of ground searches

Google Salesforce system breach exposes business data while scammers use incident to target users with fake security calls and phishing attempts.

Google announces Pixel 10 lineup with Tensor G5 chip and Gemini Nano AI, introducing Magic Cue, Pro Res Zoom up to 100x and satellite emergency support features.

C San Diego study reveals 86% of school safety companies monitor students 24/7 on personal devices, raising privacy concerns.

Users can now add their favorite outlets' coverage to the Top Stories section of Google search results by utilizing the 'preferred sources' feature. With just a few clicks, you can add Fox News.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Interstellar object 3I/ATLAS shows an unexpected frontal glow that Harvard's Avi Loeb says cannot be explained by sunlight reflection or standard cometary outgassing.

Receiving order confirmations for purchases you never made could mean your email address is being exploited in fraud operations targeting multiple retailers.

First wireless brain implant works with Apple's official protocol, enabling hands-free control of iPhones, iPads and Vision Pro through thought alone.

Data brokers sell personal details that scammers use to target retirement funds through fake financial advisor calls and convincing phishing attempts

Ten innovative tech solutions from gait sensors to smart pill dispensers help adults 65+ track fall risks and prevent injuries before they happen.

Meta AI internal documents revealed chatbots were allowed to flirt with children and engage in romantic conversations until the company was exposed by Reuters.

ChatGPT will avoid giving direct mental health advice under new OpenAI rules following instances where the AI model provided harmful or misleading responses.

Your phone tracks you in more ways than that little GPS icon suggests. Here’s how to find and clear hidden location logs on iPhone and Android.

Authorities in France and the Netherlands have been notified. Meanwhile, impacted customers are being told to stay alert.

Apple just rolled out a redesigned Blood Oxygen feature to specific models, following a recent victory in a legal dispute.

Kidney dialysis provider DaVita experienced a ransomware breach by the Interlock gang affecting 916,000 people in the second-largest U.S. healthcare attack of 2025.

A Chinese-made Unitree R1 robot walked Manhattan streets and shopped for shoes as part of KraneShares' $28 million AI robotics fund promotion campaign.

The ShinyHunters cybercriminal group breached Google's Salesforce system through vishing attacks, stealing business contact details and customer data.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Small Businesses: Company Car Vs. Personal Mileage Reimbursement In Hurricane Katrinas Wake

Tax