On December 19, 2024, the Internal Revenue Service (IRS) released the updated mileage rates for 2025, effective from January 1, 2025. These rates are used to calculate deductible expenses for operating vehicles for business, medical, charitable, or moving purposes. Here’s a breakdown of the new rates and what they mean for taxpayers.
Updated Mileage Rates for 2025
- Business Use:
- 70 cents per mile – a 3-cent increase from 2024.
- Applies to all vehicles, including electric, hybrid-electric, gasoline, and diesel-powered models.
- The increase reflects rising costs associated with vehicle operation.
- Medical and Moving Purposes:
- 21 cents per mile – unchanged from 2024.
- Moving mileage rates apply only to active-duty Armed Forces personnel who meet specific requirements.
- Charitable Purposes:
- 14 cents per mile – unchanged since 1998, as the rate is set by federal law.
Why the Rates Matter
The IRS mileage rates simplify expense tracking for taxpayers who use their vehicles for eligible purposes. Here’s how the rates are calculated:
- Business Mileage: Determined by analyzing both fixed and variable costs of operating a vehicle, including maintenance, fuel, and insurance.
- Medical and Moving Mileage: Focuses on variable costs, like fuel and wear-and-tear.
- Charitable Mileage: Statutory rate, unchanged unless modified by Congress and signed into law.
Who Can Claim Mileage Deductions?
To claim mileage deductions, taxpayers must meet specific eligibility requirements:
- Business Use:
- For self-employed individuals or employees who drive for work-related purposes.
- Cannot claim if reimbursed by an employer.
- Medical Use:
- Only available to taxpayers who itemize deductions and whose medical/dental expenses exceed 7.5% of their adjusted gross income (AGI).
- Moving Use:
- Exclusive to active-duty military members relocating under military orders.
- Charitable Use:
- Applies to mileage driven while volunteering for qualified nonprofit organizations.
How to Track and Report Mileage
Keeping accurate records is essential for claiming deductions. Taxpayers should log:
- Date of travel
- Purpose of the trip
- Starting and ending locations
- Total miles driven
Many people use apps or spreadsheets to track mileage, ensuring they have documentation to support their claims in case of an audit.
Why the Rates Didn’t Change for Medical and Charitable Purposes
The 21-cent rate for medical and moving purposes remains the same due to minimal changes in variable costs. The 14-cent charitable rate hasn’t increased since 1998 because it is controlled by federal law. Adjustments require Congressional approval, which hasn’t occurred in decades.
Impact on Taxpayers
- Business Owners and Self-Employed: The increased rate for business use provides slight relief against rising vehicle costs, allowing for higher deductions.
- Active-Duty Military: Continuation of moving deductions ensures some support during relocations.
- Charity Volunteers: Unchanged rates mean deductions won’t offset rising travel costs.
Conclusion
The updated mileage rates for 2025 reflect the IRS’s analysis of vehicle operation costs, ensuring fairness for taxpayers using their vehicles for approved purposes.
By staying informed and maintaining proper documentation, taxpayers can maximize their deductions and reduce their taxable income.
If you’re unsure whether you qualify, consult a tax professional or visit the IRS website for detailed guidelines.
This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.
Filza specializes in simplifying financial topics for everyday readers. Whether breaking down Canada’s tax guides or U.S. benefits like SNAP and VA Disability, Filza’s relatable writing style ensures readers feel confident and informed. Follow her insights on LinkedIn or reach out via email at shewrites.health@gmail.com.
