Last Updated: Oct 24, 2024
What is the Standard IRS Mileage Rate?
The standard mileage rate is the default cost per mile to drive established by the Internal Revenue Service (IRS). It is for taxpayers who claim a tax deduction on an IRS form for the cost of using a vehicle for business expenses, charitable or medical purposes, and even moving expenses. This federal mileage rate varies depending on the type of expense and is adjusted annually by the IRS.
It makes it easier to figure out car expenses for tax deductions because it includes all variable costs of operating and expenses related to business.
Importance for Taxpayers and Businesses
Using the standard mileage rate saves time and effort. It’s a simple way to claim car expenses on your taxes. It’s great for small businesses and those who work for themselves.
How the IRS sets mileage rates
Standard mileage deduction rates are based on cost data and analysis that Motus compiles and sends out to the IRS. Motus uses data from the whole country and measures gas/oil prices, service costs, automobile insurance premiums, travel expenses, depreciation, and other costs included in operating and maintaining a car.
The standard mileage rate for automobile business purposes is based on both fixed and variable costs of using a vehicle, while medical and moving rates are only based on the variable costs of car driving.
How the IRS Determines the Federal Mileage Rate
The IRS looks at several things when setting the average rate:
- Fuel prices and how cars use fuel
- How much the car loses value over time
- Insurance costs
- Maintenance expenses
- Tire wear
| Cost Category | Percentage of Rate |
|---|---|
| Fuel | 30% |
| Depreciation | 25% |
| Insurance | 15% |
| Maintenance | 20% |
| Tires | 10% |
For charity purposes, the standard mileage rate is based on the minimum value established by federal law. It is meant to compensate taxpayers for expenses they usually pay out of their pocket and are not reimbursed for by anyone else but the IRS.
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What does the IRS Standard Mileage Rate cover?
- The same tariffs apply to all passenger cars, including cars, vans, pickups, and panel vans.
- The mileage rates cover variable costs for vehicle operations such as gasoline, oil, tires, maintenance, and repairs, and fixed costs for vehicle operations such as insurance, registration, depreciation, and leasing.
- The mileage rates do not cover the cost of parking and tolls and they do not vary by geography, it’s the same amount throughout the U.S.
- Taxpayers cannot deduct mileage for the private usage of the vehicle
Types of mileage rates
Business Miles
Chad delivers groceries as a Spark delivery driver for Walmart, for which he uses his own car daily. Our freelancer, Chad drives from home to Walmart and visits several clients a day from there. He can deduct 67 cents for every business mile he drives in 2024 between Walmart and a client, and also between clients. However, he is not able to deduct the costs of commuting between his home and Walmart. Chad uses an automatic mileage tracker app, which is both available for iOS and Android phones and creates a mileage log in just 7 minutes every month. Chad is a wise man, be like Chad. 🙂
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Charity Miles
Rose does volunteer work for Hunger Fight Inc. in Jacksonville, Florida. She drives to different places in the area to collect charity and run other types of errands for the organization, which is qualified to provide her with a charitable deduction for the miles she drives. This amount is 14 cents per mile.
How much charity can you deduct in 2024?
In general, charitable gifts can be deducted up to 60% of your AGI (Adjusted Gross Income), but you may be limited to 20%, 30%, or 50% depending on the type of contribution and the organization (contributions to certain private foundations, veterans organizations, fraternal societies, and cemetery organizations come with a lower limit, for instance).
The specifics can be found in IRS Publication 526.
Miles for Medical purposes
Marshall broke his jaw and has been paying hospital and doctor visits ever since. He can deduct the visits that are not covered in his health plan provided by his employer. The medical rates are limited to his AGI. It means that medical expenses are deductible only if they exceed 7.5% of his AGI.
So, if his annual income is $50,000, he can claim a medical deduction only if his medical expenses exceed $3,750. According to the current mileage tax deduction rules, he cannot claim any deductions up to $3,750. Medical expenses include costs of treatments affecting the structure or function of the body, alleviation, diagnosis, and the treatment or prevention of diseases.
Moving expenses
Since the 2017 TCJA (Tax Cut and Jobs Act), only active-duty military members using their privately owned vehicle (POV) can deduct moving expenses. If you are on active duty, you can claim a moving deduction from your taxable income on your Form 3903 and include it as an attachment to your Form 1040. The relocation must be the result of a military order and must be a permanent change os station (PCS), or you must be a member of a protected area, that is servicing more than 100 miles from your home. In these cases, you can deduct unreimbursed moving expenses for you, your spouse, and your dependents.
Who Can Claim the Standard Mileage Rate?
The standard mileage rate is for many people. Self-employed folks use it for vehicle expenses on their taxes.
They list these on Form 1040, Schedule C.
Workers who drive for work might also qualify. Many employers pay based on the IRS rate. If not, you can claim it as an itemized deduction.
| Category | Eligibility | Form Used |
|---|---|---|
| Self-employed | Yes | Form 1040, Schedule C |
| Employees (reimbursed) | No (but may receive tax-free reimbursement) | N/A |
| Employees (unreimbursed) | Limited | Form 1040, Schedule A |
| Volunteers | Yes (for charitable driving) | Form 1040, Schedule A |
Volunteers driving for charity can also get a mileage deduction. But, it’s at a lower rate. Keep good records of your miles for your claims.
But, there are some rules. You can’t use the standard rate for five or more business vehicles at once. Always check the IRS or talk to a tax expert to make sure you can claim these deductions.
Mileage Reimbursement of Employees in 2024
Tax Cuts and Jobs Act of 2017 temporarily abolished various personal itemized deductions until December 31, 2025, prohibiting taxpayers from claiming deductions for unpaid employee travel expenses. Previously, various personal deductions of over 2% of Adjusted Gross Income (AGI) had been deductible.
Many companies use the IRS mileage rate to reimburse employees for business trips by car. Mileage Reimbursement is a profitable financial solution for both the employer and the employee, depending on what method the parties use:
- Car allowance (fixed monthly lump sum)
- Standard mileage rate
- FAVR (Fixed And Variable Rate), which is the combination of the first two
Mileage Reimbursement Rates in 2024 2023 and Beyond
The business mileage rate changes every year, however, the charity mileage rate has not changed ever since 2011. 2022 saw the first mid-year change in the business mileage rate since 2011. For the changes of numbers in detail, see the official IRS table.
How about claiming mileage reimbursement for previous years?
You might be surprised to learn that you can claim a mileage deduction for 3 years retrospectively. MileageWise helps you recover your past trips and offers you two unique features to back up your claim retrospectively:
- Google Timeline Import: as an industry-first solution, MileageWise’s dedicated recovery feature lets you take advantage of the Google Maps records Google has saved for you. While these records can’t be used in your IRS-Proof log in their raw format, MileageWise can easily format and incorporate them into your final submission.
- AI Wizard: MileageWise’s AI-powered tool can suggest realistic trips based on your past driving patterns and the clients/locations visited. These then can be, again, incorporated into your final log. This is a perfect alternative if your Google Timeline is missing.
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How to calculate a mileage deduction for reimbursement
There are two ways to calculate a mileage deduction: you can choose the standard mileage rate or the actual expense method.
Standard Mileage Rate
The standard mileage rate is a simple way to deduct miles. It is based on the miles traveled, not the actual cost of maintaining your car. To use the standard mileage rate for a vehicle, you have to choose this method in the first year of using your car in your business. Then, you can choose to deduct based on the standard mileage rate or the actual cost for subsequent years.
If you choose a standard mileage rate for the vehicle you are leasing, you must adhere to this method throughout the entire lease period. If you choose the standard mileage rate method, you will need to track your miles to calculate the corporate year-end deduction. For that, an automatic mileage tracker app is strongly recommended, as you can save yourself plenty of hours when automatically logging your 1000+ trips/month compared to tracking your miles on paper or an Excel sheet.
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Actual Expense Method
The actual expense method is for those who’d like to deduct the actual costs of operating an automobile for business instead of their mileage. These deductible costs of operating include gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments). These are attributable to the portion of the total miles driven that are business miles.
If you choose this method in the first year of using a vehicle, you won’t be able to switch to the standard mileage rate as long as you drive that car for business.
Whether you’re an employee or an entrepreneur, having high costs of driving a vehicle or owning a very expensive vehicle usually means you can deduct more if you can prove the actual expenses with appropriate receipts.
What You Need To Track With The Actual Expense Method?
Itemized vehicle expenses mean tracking all your car expenses to calculate the deductible costs. This includes:
- Gas and oil
- Maintenance and repairs
- Vehicle insurance
- Registration fees
- Depreciation
Itemizing can give you bigger deductions, especially if you drive a lot or have an expensive car. But, it requires keeping detailed records.
| Factor | Standard Mileage Rate | Itemized Expenses |
|---|---|---|
| Record-keeping | Mileage log only | All receipts and mileage log |
| Best for | Low-cost, high-mileage vehicles | Expensive, low-mileage vehicles |
| Depreciation | Included in rate | Calculated separately |
| Flexibility | Less flexible | More flexible |
Think about your car’s age, cost, and how much you use it. New, expensive cars often get more from itemizing because of depreciation. Older, efficient cars might do better with the standard rate.
Remember, once you use the standard mileage rate for a leased vehicle, you must use it for the whole lease. Choose wisely to get the most deductions under current tax laws.
Calculating Your Mileage Deduction Using the 2024 Rate
Figuring out your mileage deduction can be tricky, but it’s worth the effort. Let’s break down the process and explore some helpful tools for accurate tax deduction calculation.
Step-by-Step Guide to Calculation
To calculate your mileage deduction:
- Track your business miles driven
- Multiply total miles by the 2024 rate
- Add up parking fees and tolls
- Sum these amounts for your total deduction
Keep detailed records of your trips, including dates, destinations, and purposes because this information is used to calculate the deductible miles.
Common Mistakes to Avoid
When claiming mileage deductions, steer clear of these errors:
- Mixing personal and business miles
- Forgetting to log start and end odometer readings
- Not keeping receipts for parking and tolls
- Using outdated mileage rates
- Mixing business miles with medical or moving
By avoiding these pitfalls and using reliable tracking methods, you’ll maximize your deduction while staying compliant with IRS rules.
Many businesses have been suffering because of the increased gas prices and other goods. The increase of the Standard Mileage Rate in 2024 can mean a bit of a relief to many and also a good reason to make sure that you create a 100% IRS-Proof Mileage Log, that meets every expectation.
Recordkeeping Requirements for Mileage Deductions
Keeping accurate records is key when claiming mileage deductions. The IRS has strict rules to make sure taxpayers report their vehicle use right. By keeping a detailed mileage log, you protect yourself from IRS audits and get the most from your deductions.
Essential Information to Document
Your mileage log should have important details for each trip. Write down the date, destination, purpose, and total miles. For business trips, mention the client or customer you visited. This detail helps your records pass IRS checks.
If you are interested an example here is a mileage log sample.
IRS-Approved Recordkeeping Methods
The IRS allows different ways to track your mileage. You can use a logbook, spreadsheet, or mobile app. Many prefer apps that log trips and calculate deductions automatically. The most important thing is to be consistent.
| Recordkeeping Method | Pros | Cons |
|---|---|---|
| Physical Logbook | Simple, no technology required | Manual entry, prone to errors |
| Spreadsheet | Easy to organize, calculate totals | Requires discipline to update regularly |
| Mobile App | Automatic tracking, GPS accuracy | May drain phone battery, privacy concerns |
Duration for Keeping Mileage Records
The IRS wants you to keep mileage records for at least three years after filing your tax return. These records are crucial if you’re audited. It’s smart to keep them longer, especially for business use.
By following these guidelines, you’ll be ready for any IRS questions. You’ll also make sure you’re getting the mileage deduction you deserve.
Looking for a comprehensive mileage logging solution?
Use MileageWise to track your miles. This all-inclusive software guarantees precise documentation of your journeys, empowering you to maximize your tax deductions while adhering to Internal Revenue Service (IRS) guidelines for mileage logs. With our powerful Dashboard and intuitive Mobile App, managing your mileage has never been easier.
Google Timeline has your Back
With MileageWise, you can get the most out of your business mileage tax deduction, track your business miles automatically with an app, or even convert your Google Timeline trips into an IRS-approved mileage log for taxes in just 7 minutes a month.
For this, we strongly suggest that you turn on Location History in your Google account, which automatically tracks every one of your trips. If anything happens in the future, you’ll have your trips in Google Timeline, which you’ll be able to convert into an IRS-approved mileage log with the help of MileageWise.
IMPORTANT: This method does not substitute using a piece of mileage logging software such as MileageWise but gives you an extra backup in a cloud that can save you thousands of dollars when transformed into a real mileage log.
TIP: In case your Google Timeline History ends up missing, reconstruct your trips with the AI Recommendation Wizard! With our AI Wizard feature, you can recreate your past miles and fill in the gaps with ease while ensuring IRS compliance.
FAQs
The IRS allows reimbursements for individuals using a personal vehicle for business, medical, charitable, or moving purposes for military personnel. For 2024, the standard mileage rates are 67 cents per mile for business, 21 cents for medical and moving, and 14 cents for charity.
A business mile includes any mile driven for business-related activities, excluding commuting between home and your regular workplace. Miles driven from your office to client meetings, between job sites, or to a business event all count as business miles.
Yes, the IRS mileage rate includes the cost of gas along with other vehicle expenses like maintenance and insurance. This rate simplifies the deduction process, allowing you to calculate your expenses based on the miles driven rather than tracking each cost separately.
Car registration fees are not generally deductible from your taxes on a federal level as part of the standard mileage deduction. However, if the fee is based on the vehicle’s value, it may be deductible as a personal property tax.
To calculate the travel fee for a trip using the IRS standard mileage rate, multiply the total miles driven for the trip by the applicable mileage rate (67 cents for business in 2024). For example, if you drove 100 miles for business purposes, your travel fee would be $67.
To calculate annual mileage for tax deductions, follow these steps:
Record Start and End Odometer Readings: At the beginning and end of the year, note the odometer readings of the vehicle used for business purposes.
Track Business Miles: Throughout the year, keep a detailed log of all miles driven for business purposes. This log should include the date of each trip, the purpose, and the miles driven.
Subtract to Find Annual Business Mileage: Subtract the starting odometer reading from the ending odometer reading to get the total miles driven for the year. Then use your detailed log to determine what portion of these miles were for business.
