The IRS increases the standard mileage rate for business use in 2025, offering taxpayers updated guidelines for calculating deductible vehicle expenses. Starting January 1, 2025, the optional standard mileage rate for automobiles driven for business purposes will rise by 3 cents, bringing the total to 70 cents per mile. This adjustment reflects the changing costs of operating a vehicle and is vital for business owners and taxpayers alike.
What Are the 2025 Standard Mileage Rates?
The IRS has announced the following mileage rates effective from January 1, 2025:
| Purpose | Rate per Mile (2025) | Change from 2024 |
|---|---|---|
| Business Use | 70 cents | +3 cents |
| Medical Use | 21 cents | Unchanged |
| Moving (Armed Forces) | 21 cents | Unchanged |
| Charitable Use | 14 cents | Unchanged |
These rates apply to all types of vehicles, including fully electric, hybrid, gasoline, and diesel-powered automobiles.
- Business Mileage Rate Increase: The 3-cent increase for business use is significant, reflecting an annual study of both fixed and variable vehicle operating costs.
- No Changes for Medical, Moving, or Charitable Use: Rates for these purposes remain the same as in 2024.
- Set by Statute: The charitable mileage rate remains at 14 cents due to statutory regulations.
Mileage Rates for All Years (Cents/Mile)
Let’s check comprehensive summary of standard mileage rates for different years, including rates for business, medical, moving, and charitable purposes. We can used these for for accurate record-keeping and expense calculations.
| Period | Business Use | Charity Use | Medical or Military Moving | Source |
| 2025 | 70 | 14 | 21 | IR-2024-312 |
| 2024 | 67 | 14 | 21 | IR-2023-239 |
| 2023 | 65.5 | 14 | 22 | IR-2022-234 |
| 7/1/2022-12/31/2022 | 62.5 | 14 | 22 | IR-2022-124 |
| 1/1/2022-6/30/2022 | 58.5 | 14 | 18 | IR-2021-251 |
| 2021 | 56 | 14 | 16 | IR-2020-279 |
| 2020 | 57.5 | 14 | 17 | IR-2019-215 |
| 2019 | 58 | 14 | 20 | IR-2018-251 |
| 2018 (TCJA) | 54.5 | 14 | 18 | IR-2017-204 |
| 2017 | 53.5 | 14 | 17 | IR-2016-169 |
| 2016 | 54 | 14 | 19 | IR-2015-137 |
| 2015 | 57.5 | 14 | 23 | IR-2014-114 |
| 2014 | 56 | 14 | 23.5 | IR-2013-95 |
| 2013 | 56.5 | 14 | 24 | IR-2012-95 |
| 2012 | 55.5 | 14 | 23 | IRB-2012-02 |
| 7/1/2011-12/31/2011 | 55.5 | 14 | 23.5 | IR-2011-69 |
| 1/1/2011-6/30/2011 | 51 | 14 | 19 | IR-2010-119 |
Who Can Use the Standard Mileage Rates?
The standard mileage rates simplify the process of deducting vehicle-related expenses. Eligible taxpayers include:
- Business Owners: Deduct expenses for vehicles used in conducting business.
- Active-Duty Military Personnel: Deduct moving expenses for permanent change of station orders.
- Charitable Volunteers: Deduct travel costs associated with charitable work.
It is important to note that under the Tax Cuts and Jobs Act, unreimbursed employee travel expenses are no longer deductible.
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How Are Mileage Rates Determined?
The IRS determines mileage rates through detailed studies:
- Business Use: Rates are based on both fixed and variable costs, including fuel, maintenance, and depreciation.
- Medical and Moving Use: Rates reflect only variable costs.
- Charitable Use: The rate is set by statute and does not fluctuate annually.
This method ensures that the rates are fair and reflective of real-world costs.
Calculating Your Vehicle Deduction: Standard vs. Actual Expenses
Taxpayers have two options for deducting vehicle expenses:
1. Standard Mileage Rate
- Easy to use and requires minimal record-keeping.
- Best for those who drive frequently for business purposes.
2. Actual Expense Method
- Allows taxpayers to deduct specific costs, including fuel, repairs, insurance, and depreciation.
- Requires meticulous documentation and calculation.
By below Practical example, we can understand which method we will get benefited. accordingly, you need to select the method to calculate vehicle expenses.
| Expense Type | Standard Rate | Actual Expenses |
| Miles Driven | 10,000 miles | N/A |
| Rate/Cost per Mile | 70 cents | $8,000 total expenses |
| Total Deduction | $7,000 | $8,000 |
Taxpayers should evaluate which method provides the greatest benefit.
Important Rules for Using Standard Mileage Rates
- First-Year Rule: If you own a vehicle and choose the standard mileage rate in its first year of use, you can alternate between standard and actual expenses in subsequent years.
- Leased Vehicles: If you opt for the standard mileage rate, you must use this method throughout the lease term, including any renewals.
Additional Information for Employers
Employers providing vehicles to employees must adhere to specific valuation rules:
- Cents-Per-Mile Valuation Rule: Determines the fair market value of personal vehicle use.
- Fleet-Average Valuation Rule: Applicable for employers managing multiple vehicles.
The IRS Notice 2025-5 outlines these details, including the maximum automobile cost used to calculate reimbursement allowances under fixed-and-variable-rate (FAVR) plans.
Why Is the Business Mileage Rate Increasing?
The increase to 70 cents per mile reflects rising vehicle operation costs, including:
- Higher fuel prices.
- Increased maintenance and repair expenses.
- Inflation impacting vehicle depreciation values.
This adjustment ensures that taxpayers receive fair deductions for legitimate vehicle use.
Bottom Line
The IRS increases the standard mileage rate for business use in 2025, making it more crucial than ever to track vehicle usage accurately. Whether you’re a small business owner, a medical professional, or a charitable volunteer, understanding these rates can help maximize your tax deductions. By choosing the right deduction method and maintaining detailed records, you can navigate these changes effectively.
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