The Internal Revenue Service (IRS) has released the standard mileage rates for 2024, reflecting an adjustment in the reimbursable costs of operating an automobile for different use cases. The new rates show an increase from the previous year, adapting to the evolving economic landscape and vehicle operating costs.
2024 IRS Mileage Reimbursement Rates
The updated rates for 2024 are as follows:
- Business Use: The rate has been set at 67 cents per mile, a 1.5-cent increase from the 2023 rate. This rate is applicable for automobiles used for business purposes, including cars, vans, pickups, and panel trucks.
- Medical or Moving Purposes: For qualified active-duty members of the Armed Forces, the rate is 21 cents per mile for medical or moving purposes. This reflects a decrease of 1 cent from the 2023 rate.
- Charitable Organizations: The rate for miles driven in service of charitable organizations remains unchanged at 14 cents per mile, as this rate is statutorily set and does not typically fluctuate annually.
These rates are applicable to electric and hybrid-electric vehicles, in addition to traditional gasoline and diesel-powered vehicles.
Understanding the Mileage Rate
The standard mileage rate for business use is determined based on an annual study of both fixed and variable costs involved in operating an automobile. The rate for medical and moving purposes primarily considers the variable costs.
Changes in Tax Deductions
Under the Tax Cuts and Jobs Act, certain changes affect taxpayers’ ability to claim deductions related to vehicle use:
- Employee Travel Expenses: Taxpayers cannot claim miscellaneous itemized deductions for unreimbursed employee travel expenses.
- Moving Expenses: Deductions for moving expenses are no longer available, except for members of the Armed Forces on active duty who are moving under orders to a permanent change of station.
Options for Taxpayers
Taxpayers retain the choice of either using the standard mileage rates or calculating the actual costs of using their vehicles. However, if opting for the standard mileage rate, it is typically required to choose this method in the first year the car is available for business use. For leased vehicles, if the standard mileage rate is chosen, it must be used for the entire lease period (including renewals).
Using the IRS Mileage Rate 2024
The IRS mileage rate for 2024 is designed to support individuals who use their personal vehicles for work-related activities and bear the associated costs independently.
Small Business Deals
Self-Employed Individuals: If you’re self-employed, you can claim your business mileage for 2024 when filing taxes with the IRS at the start of the subsequent year. This provision allows you to get reimbursed for the miles driven for business purposes. Learn more about how self-employed individuals can claim mileage from the IRS.
Employed Individuals: The situation is slightly more complex for those in employment. Due to the Tax Cuts and Jobs Act, employees cannot deduct mileage expenses from the IRS, even if their employer does not compensate them for business-related travel. Therefore, the only financial recovery for any business mileage expenses incurred personally would be through your employer.
While employees are generally recommended to adhere to the official IRS mileage rate for 2024, employers are not legally required to follow this rate. They may reimburse at a lower rate or cover actual expenses, provided that you can furnish appropriate receipts as proof.
This update reflects the latest policies and rates set by the IRS for the year 2024, catering to both self-employed and employed individuals who use their vehicles for business purposes.
The details of these changes, including the maximum automobile cost for calculating allowances under a Fixed and Variable Rate (FAVR) plan and the fair market value for employer-provided automobiles, 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 actual expenses incurred by taxpayers.