On December 19, 2024, the Internal Revenue Service (IRS) released the optional standard mileage rates for 2025. These rates are used to calculate deductible expenses associated with operating an automobile for business, charitable, medical, or qualified moving purposes.
The 2025 standard mileage rates are as follows:
Business use: 70 cents per mile, an increase of 3 cents from the 2024 rate.
Medical or moving purposes: 21 cents per mile, unchanged from 2024. This rate applies only to qualified active-duty members of the Armed Forces.
Charitable purposes: 14 cents per mile, unchanged from 2024 as mandated by statute.
These rates apply to all vehicle types, including fully electric and hybrid vehicles, as well as those powered by gasoline or diesel.
Limitations Under the Tax Cuts and Jobs Act
The Tax Cuts and Jobs Act prohibits taxpayers from claiming a miscellaneous itemized deduction for unreimbursed employee travel expenses. Additionally, moving expense deductions are restricted to active-duty Armed Forces members relocating under orders for a permanent change of station.
Calculating Vehicle Expenses
Taxpayers have the option to calculate the actual costs of using their vehicle instead of applying the standard mileage rates. For taxpayers using the standard mileage rate:
If the vehicle is owned, the standard mileage rate must be applied in the first year the vehicle is used for business purposes. In subsequent years, taxpayers can choose between the standard mileage rate and actual expense calculation.
For leased vehicles, once the standard mileage rate is selected, it must be used for the entire lease term, including any renewals.
These updated rates aim to provide clarity and consistency for taxpayers calculating deductible vehicle-related expenses in 2025.
Source: Zywave - ©2024 Zywave, Inc. All rights reserved.
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