February 25, 1997


RE: Adoption of IRS Optional Standard Mileage Rates
Effective for taxable years beginning after December 31, 1995, the Department of Taxation is adopting federal Revenue Procedure 95-54, which provides optional standard mileage rates for employees, self-employed individuals, or other taxpayers to use in computing deductions for operating a passenger automobile for business, charitable, medical, or moving expense purposes. The standard mileage rates are summarized as follows:
Business  31 cents per mile
Rural Mail Carrier 46.5 cents per mile
Charitable 12 cents per mile
Medical and Moving 10 cents per mile

To claim the allowable standard mileage for business or rural mail carrier purposes, use federal Form 2106 - "Employee Business Expenses" or federal Form 2106-EZ - "Unreimbursed Employee Business Expenses," as the case may be. If you do not have to file either Form 2106 or 2106-EZ, see the federal instructions to properly claim the unreimbursed mileage (i.e., travel or transportation expenses) on federal Schedule A - "Itemized Deductions."

To claim the allowable standard mileage for charitable or medical purposes, refer to the federal instructions for Form 1040 (Schedule A - "Itemized Deductions") . The allowable standard mileage amount must be shown on Schedule A.

Hawaii Form N-139 - "Moving Expenses -- 1996" has already gone to the printer. The standard mileage rate shown on the Form N-139 is 9 cents a mile but 10 cents a mile will be allowed in computing the deduction for 1996.

Director of Taxation

HRS Section Explained: HRS Section 235-2.3(a)