A new year will mean a new, slightly higher standard mileage rate for 2025.
The Internal Revenue Service on Thursday announced that the 2025 standard mileage rate will go up by 3 cents per mile to 70 cents for the optional mileage rate for automobiles driven for business.
That’s up from 67 cents a mile in 2024. The new rate kicks in beginning Jan. 1 and it would apply to 2025 tax returns that would be filed in 2026.
The IRS standard mileage rate is a key benchmark that’s used by the federal government and used by many businesses to reimburse their employees for their out-of-pocket mileage expenses.
The rates apply to fully electric and hybrid automobiles, as well as gasoline and diesel-powered vehicles.
If you work for a company that doesn’t reimburse your mileage now, though, be warned that you cannot use the IRS business standard mileage rate to claim an itemized deduction for unreimbursed employee travel expenses. That change took place under the Tax Cuts and Jobs Act of 2017, which remains in effect through 2025. If you’re working for an employer who doesn’t reimburse mileage for your travel, you’re out of luck.
Other mileage rates will not go up in 2025.
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The standard mileage rate for medical purposes remains at 21 cents per mile in 2025, the same as 2024.
The same rate of 21 cents per mile will apply in 2025 for moving purposes for qualified active-duty members of the Armed Forces, also unchanged from last year.
The mileage rate used when driving in service of charitable organizations will remain at 14 cents in 2025. This rate is set by statute and will be unchanged.
To be sure, many drivers do not claim the mileage deduction on their federal income tax returns. Companies that reimburse their employees for mileage driven for business often follow the IRS mileage rate, but the employee doesn’t claim a deduction if they’re reimbursed.
Taxpayers need to keep in mind that getting a tax break for claiming mileage isn’t as simple as it used to be, either.
Taxpayers cannot deduct mileage for their regular moving expenses under the Tax Cuts and Jobs Act.
Self-employed individuals can claim business mileage on a tax return. Those filing 2024 returns in 2025, need to keep in mind that they will use the 2024 rate for those returns, not the new IRS mileage rate for 2025.
A self-employed taxpayer who files a Schedule C can use the standard rate to deduct expenses from mileage incurred while doing business. You can only use one method — the standard mileage rate or the business portion of actual expenses — for the same vehicle.
