IRS Announces New Mileage Rates for 2025
In mid-December, the IRS announced the new optional standard mileage starts that will be in effect starting January 1, 2025. The rates are used to calculate the deductible costs of operating a vehicle for business, charitable, medical, or moving purposes.
The standard mileage rates for vehicles (including cars, vans, pickups, and panel trucks) will be:
- 70 cents per mile driven for business use (up 3 cents from 2024)
- 21 cents per mile for medical purposes (same as 2024)
- 21 cents per mile for moving purposes, for qualified active-duty members of the Armed Forces (same as 2024)
- 14 cents per mile driven in service of charitable organizations (this rate is set by statute and remains unchanged from 2024)
These rates will apply to electric, hybrid-electric, gasoline, and diesel-powered vehicles. The business use standard mileage rate is based on an annual study of the fixed and variable costs of operating a vehicle, whereas the rate for medical and moving purposes is solely based on the variable costs from the study.
Taxpayers should be aware that, under the Tax Cuts and Jobs Act, they cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses, nor can they claim a deduction for moving expenses, unless they are active-duty members of the Armed Forces who are moving under orders to a permanent change of station. Taxpayers do have the option to calculate the actual costs of using their vehicle for the above purposes rather than using the standard mileage rates. Generally, taxpayers must opt to use the standard mileage rate in the first year a car is available for business use. However, in subsequent years, they can choose between the standard rate or actual expenses. For leased vehicles, the taxpayer must choose the standard mileage rate for the entire lease period (including renewals) if the standard mileage rate is initially chosen.
Notice 2025-5 issued by the IRS sets forth these new optional standard mileage rates for 2025, as well as other information such as the maximum automobile cost used to calculate the allowance under fixed and variable rate plans.
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