The IRS has updated the standard mileage rates for 2024, which are used to calculate the deductible costs of operating a vehicle for different purposes. Here’s what you need to know:
For business use, the rate is now 67 cents per mile, up 1.5 cents from 2023. This applies to cars, vans, pickups, and panel trucks used for business.
For medical or moving purposes, the rate is 21 cents per mile, but only for active-duty members of the Armed Forces. This is a decrease of 1 cent from the previous year.
The rate for driving in service of charitable organizations remains the same at 14 cents per mile. This rate doesn’t usually change from year to year.
These rates apply to all types of vehicles, including electric and hybrid-electric ones, as well as traditional gas and diesel vehicles.
The business use rate is based on an annual study of the fixed and variable costs of operating a vehicle. The rate for medical and moving purposes mainly considers the variable costs.
Under the Tax Cuts and Jobs Act, there have been some changes to tax deductions related to vehicle use. For instance, taxpayers can no longer claim miscellaneous itemized deductions for unreimbursed employee travel expenses. Also, deductions for moving expenses are no longer available, except for active-duty members of the Armed Forces who are moving under orders to a permanent change of station.
Taxpayers can choose to use the standard mileage rates or calculate the actual costs of using their vehicles. But if you choose the standard mileage rate, you usually have to do so in the first year the car is available for business use. For leased vehicles, if you choose the standard mileage rate, you have to use it for the entire lease period, including renewals.
The IRS mileage rate for 2024 is meant to help people who use their personal vehicles for work and have to cover the costs themselves. If you’re self-employed, you can claim your business mileage for 2024 when you file your taxes with the IRS at the start of the next year. This lets you get reimbursed for the miles you drive for business.
For employed individuals, the situation is a bit more complicated. Because of the Tax Cuts and Jobs Act, employees can’t deduct mileage expenses from the IRS, even if their employer doesn’t reimburse them for business-related travel. So, the only way to recover any business mileage expenses you incur personally would be through your employer. While employees are generally advised to stick to the official IRS mileage rate for 2024, employers aren’t legally required to follow this rate. They can reimburse at a lower rate or cover actual expenses, as long as you can provide appropriate receipts as proof.
These updates reflect the latest policies and rates set by the IRS for 2024, catering to both self-employed and employed individuals who use their vehicles for business. The details of these changes are outlined in Notice 2024-08 PDF. These adjustments in mileage rates are a response to the ongoing changes in the economy and the cost of operating vehicles, ensuring that the rates remain fair and reflective of the actual expenses taxpayers incur.
