IRS Sets Standard Mileage Rates for Vehicle Use in 2024 by Steven Rubin, CPA
Posted on January 22, 2024
by
Steven Rubin
The IRS announced the inflation adjustments taxpayers may use to determine the deductible costs of operating a motor vehicle for business, charitable and medical purposes in tax year 2024. Taxpayers also have the option to calculate these expenses based on the actual costs they incur to use their vehicles.
Effective Jan. 1, 2024, the standard mileage rates for the use of a car, van, pick-up or panel truck powered by gasoline, diesel or electricity (including hybrid vehicles) are as follows:
- 67 cents per mile driven for business use, up 1.5 center per mile from 2023
- 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from prior years.
Taxpayers may use these standard mileage rates for up to five vehicles they do not claim on their federal tax returns as Section 179 expenses or that they depreciate under the Modified Accelerated Cost Recovery System (MACRS). They also must use these standard rates in the first year they place vehicles into service for business use. In later years, they may elect to use actual expenses unless the vehicles are under a lease. Leased vehicles that elect to use the standard mileage rate in the first year of a lease must continue to that method for the entirety of the lease period.
Taxpayers generally may not claim miscellaneous itemized deductions for unreimbursed employee travel expenses unless they are self-employed, eligible educators, performing artists, certain government officials or members of the Armed Forces. Taxpayers also cannot claim deductions for moving expenses unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station.
Businesses may rely on these optional standard mileage rates to reimburse workers for the ordinary and necessary costs employees incur when using their personal vehicles for business purposes. Alternatively, employers may require workers to track the actual business use of their vehicles and submit documentation to substantiate the costs for which they request reimbursement. Companies may deduct employee reimbursements as business expenses, while employees may exclude those reimbursed amounts from their taxable income.
About the Author: Steven Rubin, CPA, is a senior manager of Tax Services with Berkowitz Pollack Brant Advisors and CPA, where he provides federal, state and local tax compliance and consulting services to corporations, closely held businesses and high-net-worth families. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or info@bpbpcpa.com.
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