IRS Mileage Reimbursement Rate 2024
Starting a business can be expensive, which is why business deductions are helpful during tax season. One significant expense for many companies is travel, as it can cost a lot of money to maintain this aspect of the job. To compensate business owners and independent contractors for their travel time, the IRS allows for a mileage rate deduction. By consulting the IRS mileage rate deduction, business owners can determine how much they can deduct for driving solely for business purposes.
In 2024, the IRS has set the mileage rate at its highest point ever, at 67 cents per mile (CPM). This is an increase of 1.5 cents from the previous year, and you can find the IRS mileage reimbursement rate for 2024 on their official website. This marks the fourth increase in the past three years, and it is important for businesses to adjust their rates accordingly.
IRS Mileage Reimbursement Rate 2024 Details
The IRS has released the updated mileage reimbursement rate for 2024, which is set at 67 CPM. This rate applies to business mileage and should not be confused with the rates for charitable mileage or relocation and medical expenses. The purpose of these standardized rates is to help individuals and businesses calculate the value of using a vehicle for tax purposes, specifically as tax deduction tools. Many businesses use the business mileage rate as the standard method of reimbursing employees for their travel expenses.
What is the Standard Mileage Rate?
The standard mileage rate is the default rate set by the IRS for taxpayers who choose to deduct their own vehicle expenses for business, charity, or medical reasons. It is also known as the standard mileage rate, mileage per diem, or deductible mileage. The IRS sets these rates annually, and they vary depending on the purpose of the vehicle usage. In 2023, the standard mileage rate for business usage was 65.5 CPM, and it has increased to 67 CPM for the 2024 tax year.
IRS Mileage Rates 2024
Knowing the IRS standard mileage rate is important for businesses and individuals who drive for work. Self-employed individuals, such as gig workers and rideshare drivers, can save significant money by deducting car expenses from their taxes. The IRS mileage rate for 2024 serves as a crucial standard for determining reimbursement rates for both companies and workers.
For the year 2024, the federal mileage rates set by the IRS are as follows:
- Business use (cars, vans, pickups, panel trucks): 67 CPM
- Medical and moving (Armed Forces active-duty only): 21 CPM
- Charity: 14 CPM
IRS Standard Mileage Rate for Business
If you are self-employed or a contractor, you may be eligible to deduct the expense of using your vehicle for work-related travel. The tax deduction varies depending on how you use your car. Generally, miles associated with business travel, such as trips to clients, meetings, or temporary workspaces, can be deducted. However, there are exceptions to this rule.
You can choose to deduct either actual expenses (such as parking fees, maintenance, depreciation, fuel, etc.) or use the standard mileage rate mentioned above, but not both.