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, we’ll delve into the details of 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, reflecting a 1.5 cent rise from 2023. This adjustment is crucial for individuals using their vehicles for business-related activities, such as driving to meetings or client visits.

Medical or moving purposes: 21 cents per mile.

For qualified active-duty members of the Armed Forces utilizing their vehicles for medical or moving purposes, the rate will be 21 cents per mile in 2024. While this represents a decrease of 1 cent from 2023, it remains a notable figure for military personnel navigating these specific circumstances.

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 generously 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

These mileage rates apply universally, encompassing not only traditional gasoline and diesel-powered vehicles but also electric and hybrid-electric automobiles. This demonstrates the IRS’s commitment to adapting to the evolving landscape of vehicle technologies.

How rates are determined

The standard mileage rate for business use stems from an annual study that examines the fixed and variable costs associated with operating an automobile. Conversely, the rate for medical and moving purposes is based solely on variable costs, emphasizing the specific considerations for these types of activities.

Taxpayer considerations and options

Notably, the Tax Cuts and Jobs Act has implications for taxpayers, barring the claim of miscellaneous itemized deductions for unreimbursed employee travel expenses. Additionally, deductions for moving expenses are limited, with exceptions for active-duty members of the Armed Forces undergoing permanent changes of station.[3]

Taxpayers 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 2024-08PDF provides the optional 2024 standard mileage rates. It also outlines the maximum 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 available for personal use in 2024.

Consult a tax professional

Navigating IRS rate changes can be a complex task, and seeking guidance from a qualified tax professional is highly recommended to ensure accurate and compliant financial practices. You can also engage a vehicle reimbursement program provider. If you already have a provider of a vehicle reimbursement program, you can ask them how the IRS rate will affect your business.

Conclusion

The IRS’s announcement of the 2024 standard mileage rates brings both clarity and considerations for taxpayers. As individuals navigate the upcoming year, understanding these rates and their implications will be essential for making informed decisions related to business, medical, and charitable activities. Stay informed, plan strategically, and ensure compliance with the latest tax regulations to maximize your financial well-being.

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.