IRS Announces 2024 Mileage Rates (67¢)

Introduction

The Internal Revenue Service (IRS) has released[1] the highly anticipated standard mileage rates for 2024, impacting the deductible costs of operating an automobile for various purposes. In this blog post, discuss the latest announcement and explore how these changes might affect taxpayers.

New 2024 mileage rates for business, medical, moving, charity

Business use: 67 cents per mile

Starting January 1, 2024, the standard mileage rate for business use will increase to 67 cents per mile, being a 1.5 cent rise from 2023. This adjustment is relevant for individuals who drive their personal vehicles for business-related activities on behalf of their employer.

Medical or moving purposes: 21 cents per mile

For qualified active-duty members of the Armed Forces who use their vehicles for medical visits or moving, the rate will be 21 cents per mile in 2024. This is a decrease of one cent from 2023.

Service of charitable organizations: unchanged at 14 cents per mile

The rate for miles driven in service of charitable organizations remains unchanged at 14 cents per mile, as set by statute. This rate is applicable to volunteers who contribute their time and resources to support charitable causes.

Maximum standard automobile cost

The maximum standard automobile cost for 2024 is $62,000. This is up from $60,800 in 2023.[2]

The maximum allowable standard automobile cost for computing FAVR plan allowances is capped at $62,000. This limit also applies to the fleet average valuation rule and the vehicle cents-per-mile valuation rule when determining the maximum fair market value (FMV) of employer-provided automobiles (company cars, fleet vehicles) in 2024. These rules also affect personal use chargebacks for fleet.

Electric and gas vehicles receive the same rate

The aforementioned mileage rates apply universally, not only to traditional gasoline and diesel-powered vehicles, but also to electric and hybrid-electric automobiles. This demonstrates the IRS’s commitment to adapting to the evolving landscape of vehicle technologies. Moreover, this could be an advantage for drivers who have purchased an electric vehicle: as gasoline prices are a significant contributor to reimbursement rates, an electricity costs are in general cheaper for the consumer than gas, being reimbursed for gas but fuelling your car with electricity could put the consumer ahead.

How rates are determined

The standard mileage rate for business use is devised by an independent organization, contracted by the IRS to conduct an annual study that examines the fixed and variable costs associated with operating an automobile. Fixed costs include depreciation, insurance, license and title fees, while variable costs include gas, maintenance, and tires.

Meanwhile, the rate for medical and moving purposes is based solely on variable costs.

Taxpayer considerations and options

To be reimbursed for mileage, taxpayers (including businesses and individuals) can use the standard mileage rate or actual expenses methods, like FAVR or 463 Accountable Allowance. Typically, taxpayers who opt to use the standard rate at the beginning of the year continue to use it til the end of the year. You can switch later if you own the vehicle, however for leased vehicles selecting the standard mileage rate, this method must be consistently applied throughout the entire lease period, encompassing renewals.

Further reading: Notice 2024-08PDF

For those seeking more detailed information, Notice 2024-08 provides the optional 2024 standard mileage rates. It also outlines the maximum allowable automobile cost used for calculating allowances under a fixed and variable rate (FAVR) plan. Furthermore, the notice specifies the maximum fair market value of employer-provided automobiles (fleet vehicles/company cars) available for personal use in 2024.

Consult a tax professional

IRS rate changes can have complex implications, depending on the nature of your business or your work, and seeking guidance from a qualified tax professional is advisable.

You can also engage a vehicle reimbursement program provider, like Cardata. If you already have a vendor for your vehicle reimbursement program, you can ask them how the IRS rate will affect your program in this and future years.

Sources

[1] IRS issues standard mileage rates for 2024; mileage rate increases to 67 cents a mile, up 1.5 cents from 2023 | Internal Revenue Service 

[2] 2024 Standard Mileage Rates Notice 2024-08 | Internal Revenue Service (PDF): https://www.irs.gov/pub/irs-drop/n-24-08.pdf

[3] Topic No. 455, Moving Expenses for Members of the Armed Forces | Internal Revenue Service 

Disclaimer: Nothing in this blog post is legal, accounting, or insurance advice. Consult your lawyer, accountant, or insurance agent, and do not rely on the information contained herein for any business or personal financial or legal decision-making. While we strive to be as reliable as possible, we are neither lawyers nor accountants nor agents. For several citations of IRS publications on which we base our blog content ideas, please always consult this article: https://www.cardata.co/blog/IRS-rules-for-mileage-reimbursements. For Cardata’s terms of service, go here: https://www.cardata.co/terms.