These rates apply to deductible expenses related to the operation of a vehicle for business, charitable, medical or moving purposes for 2025, starting January 1, 2025.
Increased business mileage rate
The largest increase: The business use of your car rate increases to 70 cents a mile for 2025 from 67 cents in 2024. This 3-cent increase shows that the IRS did, in fact, consider increased costs to operate a vehicle, including fuel, maintenance, and depreciation.
Same rates for medical, moving, and charitable purposes
The mileage rates for medical and moving purposes are unchanged at 21 cents per mile for 2024. The rate for miles driven in service of charitable organizations also remains at 14 cents per mile, which is set by statute and has been the same for several years.
Applicability across vehicle types
These standard mileage rates apply across the board to all types of vehicles, whether fully electric, hybrid, gasoline-powered, or diesel-powered. This uniformity allows consistency in applying the same rate regardless of the type of vehicle fuel used.
Optional use of standard mileage rates
Taxpayers may use the standard mileage rates to compute deductible vehicle expenses instead of computing the actual costs. It is also worth noting that, once the standard mileage rate is chosen for a vehicle during its first year of business use, the taxpayer can switch between the standard rate and actual expenses in later years. If a vehicle is leased, the standard mileage rate method must be applied consistently throughout the entire lease period, including renewals.
Mileage deductions
The TCJA supplies the applicable deductions. In particular, it states that for taxpayers, a miscellaneous itemized deduction is not allowed for unreimbursed employee travel expenses. Also, under TCJA, moving expenses due to a permanent change of station are deductible only by active-duty members of the Armed Forces.
Calculating deductions using standard mileage rates
To calculate deductions under the standard mileage rates, multiply the miles driven by the applicable rate. For example, if a taxpayer drives 10,000 miles for business in 2025, the deduction would be 10,000 miles × 70 cents/mile = $7,000. Records of all mileage should be kept to support the deductions.
Considerations for employers and employees
Employers that reimburse their employees for the use of their private automobiles on company business should adjust their reimbursement rates to conform with the new IRS standard as the need for fairness and legality dictates. Employees will also have to be informed about such rates, as they would know how much they should deduct or how much they will get as reimbursements.
