The Internal Revenue Service (IRS) has revealed that the optional standard mileage rate for automobiles utilized for business purposes will experience a slight increase of 3 cents in 2025. In contrast, the mileage rates set for other categories will remain consistent with those established in 2024. The optional standard mileage rates serve as a guideline for taxpayers to compute the deductible expenses associated with operating vehicles for various purposes, including business, charitable contributions, and medical needs. These rates also apply to active-duty members of the Armed Forces who are relocating. Effective January 1, 2025, the standard mileage rates will be as follows:
70 cents per mile: driven for business purposes, reflecting a 3-cent increase from 2024.
21 cents per mile: driven for medical purposes, remaining unchanged from the previous year.
21 cents per mile: for moving expenses specifically for qualifying active-duty military members, consistent with last year’s rate.
14 cents per mile: for services rendered for charitable organizations, which will also stay the same as in 2024.
These rates are applicable not just to traditional gasoline and diesel vehicles, but also to hybrid and fully electric cars. It’s important to note that while the mileage rate for charitable activities is set by legislation, the business rate is derived from an annual analysis of both fixed and variable expenses related to vehicle operation. Conversely, the rates for medical and moving purposes are calculated based solely on variable costs identified in the study. Under the provisions of the Tax Cuts and Jobs Act, taxpayers are unable to claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Furthermore, only active-duty military members are permitted to deduct moving costs incurred during relocations mandated by a permanent change of station.
Taxpayers have the option to use the standard mileage rates or to calculate the actual expenses incurred for vehicle use. Those opting for the standard mileage rate must initially select this method in the first year the vehicle is made available for business use. Subsequently, they can decide whether to continue using the standard mileage rate or switch to actual expense calculations in future years. For leased vehicles, however, once the standard mileage rate is chosen, it must be consistently applied throughout the entire lease period, including subsequent renewals.
