The decision raised the rate to 48.5 cents a mile for the last four months of the year, after which the tax agency plans to look again at gas prices and reevaluate the rate. It had been 40.5 cents a mile.

IRS Commissioner Mark Everson said taxpayers are entitled to a deduction that matches the real cost of operating a vehicle, which includes the prices of new vehicles and insurance along with gasoline. Many businesses use the IRS rate as a benchmark for reimbursing employees for travel costs.

The tax agency said the decision to temporarily increase the rate 8 cents in the middle of the year marked the largest single increase on record.

"It's an extraordinary step that we're taking," Everson said.

The 2006 mileage reimbursement rate could end up lower than the temporary 48.5 cents a mile if gas prices go down, Everson said.

The rate for figuring deductible medical or moving expenses increased temporarily to 22 cents a mile for the last four months of the year, up from 15 cents.

Congress sets the rate that lets individuals deduct travel costs related to charitable service, set now at 14 cents a mile.

-- Mary Dalrymple  (AP Tax Writer)