Overview of IRS Mileage Rates for 2025
The IRS has announced the 2025 standard mileage rate: 70 cents per mile, which marks an increase of 3 cents from the 2024 rate of 67 cents per mile. This updated rate, issued in IR-2024-312 on December 19, 2024, applies to the business use of personal vehicles, including cars, vans, pickups, and panel trucks. The new rate takes effect on January 1, 2025.
Mileage Rates: 2024 vs. 2025
Here is a comparison of the federal mileage rates for 2024 and 2025:
| Type of Mileage | 2025 Rate | 2024 Rate |
|---|---|---|
| Business use (cars, vans, pickups, etc.) | 70 cents/mile | 67 cents/mile |
| Medical and moving (Armed Forces only) | 21 cents/mile | 21 cents/mile |
| Charity | 14 cents/mile | 14 cents/mile |
For detailed information, refer to the IRS Notice IR-2024-312.
How You Can Use the Business Mileage Rate
For the Self-Employed (1099 Filers)
If you are self-employed and use your personal vehicle for work, you can deduct your vehicle expenses using either:
- The Standard Mileage Rate: Apply the 2025 rate of 70 cents per mile driven for business purposes.
- The Actual Expense Method: Deduct actual vehicle expenses such as gas, maintenance, and insurance.
For Employees (W-2 Filers)
- Your employer can reimburse you for business-related driving using the IRS mileage rate. However, they may choose to reimburse at a lower rate.
- If your employer reimburses above the IRS rate, the excess is considered taxable income.
Important Note: Due to the Tax Cuts and Jobs Act of 2017, employees cannot claim unreimbursed business mileage expenses on their taxes. This rule remains effective until January 1, 2026.
For Employers
Employers can use the IRS mileage rate to reimburse employees for business-related travel. Any reimbursement exceeding the standard rate is treated as taxable income for the employee.
How Are the Mileage Rates Set?
The IRS adjusts mileage rates annually based on the costs of operating and owning a vehicle. The rates are calculated as follows:
- Business Mileage Rate: Factors in both fixed and variable vehicle expenses.
- Medical and Moving Rates: Based solely on variable costs.
- Charity Rate: Set by law and has remained unchanged since 1998.
Examples of Fixed and Variable Costs:
- Fixed Costs: Insurance, registration fees, lease payments, and depreciation.
- Variable Costs: Gas, oil, tires, maintenance, and parking.
Simplify Mileage Tracking
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Learn more about IRS mileage rates and how they apply to your specific needs by visiting IRS Mileage Resources.
Stay informed about the latest IRS mileage updates, and make the most of your tax deductions in 2025!
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