Hey, Warriors and Bosses!
The IRS has announced an increase in the business standard mileage rate for 2025, effective January 1. Starting next year, the mileage rate for business use of a vehicle will rise to 70 cents per mile, up from 67 cents in 2024.
Other Mileage Rates Remain Unchanged
While the business mileage rate sees a boost, the IRS confirmed that the rates for other vehicle uses will remain the same as in 2024:
- 21 cents per mile for medical or moving purposes for qualified active-duty Armed Forces members.
- 14 cents per mile for service to charitable organizations, a rate established by statute.
These rates apply to all types of vehicles, including electric, hybrid-electric, gasoline, and diesel-powered automobiles.
Factors Driving the Rate Increase
The rise in the business mileage rate reflects the growing costs of vehicle ownership over the past year. According to Motus, a Boston-based mobile workforce management firm, expenses such as auto insurance, maintenance, and repairs have increased significantly.
However, fuel prices in 2024 have been lower compared to 2023, as noted by Motus CEO Phong Nguyen. “Many factors continue to impact driving costs in significant ways,” Nguyen stated. “It’s crucial for businesses to support employees who rely on their vehicles for work by implementing fair and accurate reimbursement strategies. This not only ensures employee satisfaction but also helps optimize reimbursement spending and minimize waste and risk.”
Mileage Rate Usage Options
Using the standard mileage rate is optional for taxpayers. Instead of relying on this rate, individuals and businesses may calculate the actual costs of operating a vehicle. The standard mileage rate provides a simplified alternative for computing deductible costs associated with business vehicle use.
Employers frequently utilize the standard mileage rate to reimburse employees tax-free for business-related vehicle use. Self-employed individuals and businesses can also use it to calculate deductible vehicle expenses without the hassle of tracking every expense.
As vehicle-related costs continue to fluctuate, this adjustment aims to better align reimbursements with actual expenses, providing relief for those who depend on their vehicles for work.
Be Audit-Secure™!
Lisa Smith, SPHR, SCP
Note: This blog post is for informational purposes only and should not be construed as legal advice. Always consult with a legal professional for advice specific to your situation.
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Lisa Smith, SPHR, SHRM – SCP
Certified EEO Investigator (EEOC)
Lead Support and Content Chief – HelpDeskforHR.com
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