IRS Sets Standard Mileage Rates for Vehicle Use in 2025 by Steven Rubin, CPA
Posted on January 14, 2025
by
Steven Rubin
The IRS released the standard mileage rate taxpayers may use to determine the deductible costs of operating a motor vehicle for business, charitable and medical purposes in tax year 2025. Taxpayers also have the option to calculate these expenses based on the actual costs they incur to use their vehicles.
Effective Jan. 1, 2025, 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:
- 70 cents per mile driven for business use, up 3 cents from 2025
- 21 cents per mile driven for medical purposes, unchanged from 2024
- 14 cents per mile driven in service of charitable organizations, the same rate as last year
- 21 cents per mile driven for moving purposes for qualified active-duty members of the Armed Forces.
Businesses may use 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, they may require workers to track the actual business use of their vehicles and submit documentation to substantiate the costs for which they request reimbursement. In both instances, companies may deduct employee reimbursements as business expenses, while employees may exclude those reimbursed amounts from their taxable income. However, employees who do not receive mileage reimbursement from their employers may not claim miscellaneous itemized deductions for 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.
Taxpayers using the standard mileage rate for a vehicle they own and use for business must choose to use the rate in effect the first year they place the vehicle in service for business use. In subsequent 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.
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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