What is the IRS Standard Mileage Rate for 2024?

Mileage Reimbursement

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Every year, the IRS updates its standard mileage rates, an important piece of information for anyone using a personal vehicle for business, medical, or charity work purposes.

As of January 1, 2024, the IRS has introduced new rates, so it’s important to know how these changes might affect taxpayers, small businesses, and self-employed people across the US. Below, we’ll break down the latest IRS standard mileage rates, what they mean for different industries, and how these rates fit into your tax return.

What are 2024’s IRS standard mileage rates?

Starting January 1st, 2024, the IRS standard mileage rates are…

$0.67 per mile for driving for business use, a 1.5 cent increase from the previous year.

$0.21 per mile for medical or moving purposes, down by one cent from last year.

$0.14 per mile for charities, which remains unchanged from last year.

These rates can be applied to all types of vehicles, including cars, vans, panel trucks, and pickups, regardless of whether they run on gas, diesel, electric, or hybrid-electric.

Why does the mileage rate change every year?

The IRS changes the mileage rates every year typically because of the fluctuating costs of owning a car. These fluctuations include gas prices, depreciation, insurance, and maintenance. For business purposes, the $0.67 per mile figure reflects the fixed and variable costs associated with driving, while the medical and moving rates focus mostly on variable costs like gas. The 2024 increase in the business mileage rate likely comes from spiking fuel prices and growing vehicle costs in the previous year.

What does this mean for taxpayers?

Whether you’re self-employed, an employee, or a small business owner, you need to understand the IRS mileage rates because they can impact your tax deductions at tax time. If you use your personal vehicle for business purposes, you can deduct $0.67 per mile driven if those miles were for work, which can be quite a rebate if you’re a real road-warrior. For example, if you drive 10,000 business miles in a year, that’s a $6,700 deduction you can claim on your tax return. Not too shabby!

For members of the Armed Forces on active duty, moving expenses are deductible if you have to move because of a permanent change of station (PCS). If this is you, you can use the $0.21 per mile rate, plus deductions for tolls and parking. However, for most other taxpayers, the Tax Cuts and Jobs Act of 2017 stopped allowing for deductions for unreimbursed employee travel and moving expenses through 2025.

Depreciation is now reflected in the business mileage rate

When you’re using the business mileage rate, a bit of that rate reflects the vehicle’s depreciation. For 2024, $0.30 per mile is considered depreciation for cars used for work related tasks. Keep in mind that if you use your actual costs to calculate your mileage deduction, you need to track all related expenses too, like fuel prices, maintenance, insurance, and repairs, etc.

What’s the difference between standard mileage and actual expenses?

When you’re claiming mileage deductions, you have two options: using the standard mileage rate or using your actual expenses. The standard mileage rate simplifies the process (no need to save every receipt), tracking actual costs can sometimes mean a larger deduction if you drive an expensive or older car that incurs higher operating costs, etc. If you choose the standard mileage rate, you have to use it in the first year you place that vehicle in service, but you can switch to actual expenses in later years.

FAQs about IRS mileage rates

Can I deduct my commuting miles?

Unfortunately, no. The IRS doesn’t allow mileage deductions for commuting from home to your work. However, if you’re driving between different work locations, then those miles are deductible.

How do I track my business miles?

To claim mileage at tax time, you need to maintain an accurate mileage log that records the date, miles driven, purpose of the trip, and destination. You can use paper logs or mileage tracking apps to simplify the process.

Are there mileage deductions for charitable organizations?

Yes, if you volunteer for a charitable organization, you can deduct $0.14 per mile driven for your engagement with that organization. However, this rate is a lot lower than the business mileage rate and remains unchanged from the previous year.

Can I deduct medical travel?

Yes, you can deduct $0.21 per mile for driving for medical care, like doctor visits, hospital stays, or physical therapy sessions, etc. Like the business rate, you can also deduct additional travel-related expenses like parking and tolls, etc.

FAVR plans as an effective alternative

Some businesses choose to use a Fixed and Variable Rate (FAVR) reimbursement program, like the one offered by Cardata, which offers a more customized approach to reimbursing employees for their vehicle costs. A FAVR program looks at both fixed costs, like insurance and depreciation, as well as variable costs, like fuel and maintenance. This allows businesses to offer a tailored reimbursement that better reflects the actual prices each employee pays, rather than using a flat rate for everyone.

Conclusion

The IRS standard mileage rate is a helpful tool for taxpayers looking to save on their vehicle expenses related to business, medical, or charitable activities. Knowing the ins and outs of the rate changes and how they impact your tax deductions can save you money, especially if you keep accurate records and use the method that best suits your work situation. Whether you opt for the simplicity of the standard mileage rate or prefer to track actual expenses, staying on top of the IRS’s annual adjustments means that you can maximize your deductions.