The IRS has updated the standard mileage deduction rates for 2024. These rates play a crucial role in calculating your mileage deductions or setting the reimbursement rate for business-related driving with your personal vehicle. The 2024 IRS mileage rates are:
IRS mileage rates are based on an annual study of the costs of operating an automobile. It includes all fixed and variable costs related to the ownership and operation of the vehicle including:
Gas prices are weighted heavily in their calculation. With an increase in average national gas prices this year, an increase in mileage rate to 67 cents per mile makes sense. The 2024 IRS mileage rate will be effective from January 1, 2024.
The standard mileage rate is revisited each year by the Internal Revenue Service. The prior rates include:
2023: 65.5 cents per mile
2022: 58.5 cents per mile for the first six months of the year, 62.5 cents for the remaining six months.
2021: 56 cents per mile
2020: 57.5 cents per mile
2019: 58 cents per mile
2018: 54.5 cents per mile
Using the standard mileage rate is a simple way of calculating mileage for your tax return. If you are self-employed and using your personal vehicle for business purposes, utilizing the new mileage rate will maximize your tax deductions. IRS approved mileage includes:
As an employer, using the IRS standard mileage rate to reimburse your employees for their business mileage streamlines administrative tasks. Employers establish the rate and rules for reimbursement, while the IRS's standard mileage rates act as the upper limit for what can be deducted for tax purposes.
After understanding the IRS mileage rate, it's time to maximize your mileage deductions in 2024. Making the most out of every mile means knowing exactly how far you are driving for work. Tracking all your mileage is important so you never miss a mile and provide evidence for your deduction in the event of an audit.
Here are some ways to track mileage to that qualify for tax deductions, including:
No matter the method, it’s important to keep a detailed record documenting the date, purpose, and distance of each business-related trip.
Technology or Mileage Apps can be helpful tool in keeping accurate mileage records. Using GPS tracking and other location data, mileage tracking technology captures and documents the distance covered. An automatic mileage app like MileIQ makes this easy.
GPS-based trackers are accurate in measuring distances for both business and medical and moving purposes. They eliminate the possibility of human error in manually logging miles, and provide accurate insights into the distance traveled.
In choosing a mileage tracking app for IRS deductions, look for features such as:
Taxpayers can choose between the standard mileage rate method and the actual expense method to calculate mileage tax deductions. The standard mileage rate method provides simplicity and a fixed rate. However, individuals with higher mileage may find the actual expenses method more advantageous.
Under the actual expense method, you can deduct expenses like:
While this method allows you to deduct the actual costs of using your car for business purposes, it requires more record keeping and documentation. Despite the potential for a larger tax deduction, it may not always result in a higher deduction if your car has low depreciation or if you have high business mileage.
Comprehending these strategies and selecting the most advantageous one based on your mileage can greatly affect your tax deductions.