MileIQ: Mileage Tracker & Log

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The Current IRS Mileage Rates (2024)

At the end of last year, the Internal Revenue Service published the new mileage rates for 2024. New standard mileage rates are:

  • 67 cents per mile for business purposes
  • 21 cents per mile for medical and military moving purposes
  • 14 cents per mile for charitable purposes

Newly adjusted mileage rates apply to most gasoline-powered vehicles, including cars, vans, and pickup trucks, as well as hybrid and electric vehicles. Notable exceptions are motorcycles and scooters. 

The rates for business mileage increased, as has been the case for the past few years, to reflect growing costs of fuel and car maintenance, as well as other economic factors.

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When to use the current mileage rate?

If you’re self-employed or run a business, you can use current mileage rates to get tax deductions or to give your employees tax-free reimbursements if they use personal vehicles for work.

By using these rates, businesses ensure equitable reimbursement, and individuals can accurately claim tax deductions, contributing to transparency and fairness in the compensation process.

Using current mileage rates as an employer or employee

As a business, mileage rates inform you how much you can reimburse employees for using their vehicles for work-related travel without them having to pay income tax. This includes attending business meetings, delegations, conference trips, and anything work-related except daily trips from home to work. It helps businesses maintain employee satisfaction by providing fair compensation for using their private cars during work. 

Using current mileage rates as a self-employed person

As a self-employed individual, you can use standard mileage rates to calculate tax deductions for business use of your vehicle. As in the case of businesses, it includes all sorts of client meetings, site visits, or any travel directly related to your business activities. It’s a crucial process for many contractors as it helps decrease tax liability while staying compliant with the IRS. 

Current mileage rates can also be used to calculate tax deductions in the case of using a personal vehicle in three other situations:

  • traveling for medical purposes
  • charity use
  • moving (but only in the case of active-duty military personnel)

The IRS provides guidelines for each category that specify what type of travel qualifies for tax deduction. For example, in the case of charity-related travel, an organization has to be registered with the IRS unless it’s a church or government. 

How does the IRS set mileage rates?

Mileage rates are ment to offset the actual costs of vehicle use accurately. Each year, the IRS issues new rates after analyzing various economic factors and the dynamically changing costs of car use and maintenance, such as:

  • Cost of fuel
  • Inflation
  • Vehicle depreciation
  • Costs of maintenance and repairs
  • Government policies
  • Cost of Insurance
  • And more

The Internal Revenue Service (IRS) engages an independent contractor to conduct an annual analysis of the abovementioned factors, forming the basis for the standard mileage rate. The goal is to maintain fairness in compensation, accurately represent the costs of using personal vehicles, and ensure compliance with relevant economic and regulatory conditions.

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Historical mileage rates

Looking at historical mileage rates, we can see how various circumstances and economic factors affected them. On a few occasions, the circumstances were so drastic that a change was implemented twice a year instead of a traditional yearly change. 

The most notable examples include the fuel price spike in 2008 when the business mileage rate grew from 50,5 cents per mile to 58,5 mid-year and the most recent pandemic-related impact in 2022 (a change of over 4 cents per mile).

While the rates have varied over time, the principle of the IRS mileage rate - offering a standard, fair reimbursement rate that reflects the actual costs of operating a vehicle for designated purposes - remains constant.

Exceptions and special considerations

There are certain exceptions and special considerations when it comes to claiming mileage deductions. For instance, active-duty military members can deduct mileage related to moving for tax purposes if the move resulted from a military order.

Some professions, including government officials, performing artists, and elementary and secondary school teachers, can deduct unreimbursed travel expenses. 

In the case of charitable services, parking fees, and tolls are eligible for deduction in addition to unreimbursed out-of-pocket expenses such as gas and oil. 

How to calculate your mileage reimbursement?

If you’re deducting mileage as a self-employed person, the formula is straightforward:

Tax deduction = current mileage rate x business miles driven

For example, if you’ve driven a total of 1,000 miles for business purposes, you multiply it by the current mileage rate (67 cents per mile), you’d end up with 6,700 cents. That’s a $67 tax deduction.

Employee reimbursements can be a little more complicated, because in most states mileage reimbursements aren’t mandatory, so companies can have different policies. Still, quite often standard mileage rate is still used due to its tax-free advantage, so the formula mentioned above can still be used.

The challenging part is mileage tracking and recordkeeping. Each business mile driven for business or another deductible purpose has to be recorded and categorized. It requires both businesses and self-employed people to keep manual logs or use a digital mileage tracking tool like MileIQ to properly track and report mileage. 

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