IRS Standard Mileage Rate 2024
The Internal Revenue Service (IRS) has recently announced updates to the standard mileage rates for 2024. Taxpayers use these rates to calculate the deductible costs of operating vehicles for business, medical, moving, and charitable purposes. Here are the key details regarding these changes and how they affect taxpayers.
Key Changes in Mileage Rates
The business use standard mileage rate has increased by 1.5 cents to 67 cents per mile. This rate is used by self-employed individuals or employees who claim vehicle expenses for business purposes on personal vehicles. The increase from 65.5 cents to 67 cents per business mile means larger potential tax deductions and savings for those driving personal vehicles for business purposes.
Conversely, the rate for medical and moving purposes has slightly decreased from 22 to 21 cents per mile. This lower rate applies to active-duty members of the military who are claiming deductible costs for vehicles used for medical or moving due to change of permanent duty station orders.
For volunteers driving on behalf of charitable organizations, the mileage rate remains unchanged at 14 cents per mile.
Why Do These Rates Matter?
The updated standard mileage rates impact taxes as it creates a basis for the amounts individuals and businesses can deduct per mile driven for business, medical, moving, or charitable purposes. Rather than tracking actual vehicle expenses, the IRS allows taxpayers to use the standard rate which it determines by factoring in the overall cost of vehicle operation and maintenance in order to establish the per mile rate of reimbursement and/or deduction.
It is essential to note that taxpayers always have the option to calculate deductible vehicle costs based on actual expenses for fuel, insurance, repairs, depreciation, and so on. However, most taxpayers choose the standard rates for ease and convenience.
Do not forget, if mileage is being deducted, the taxpayer must keep a contemporaneous log of actual miles driven for business and tax purposes.
Can I Switch Between the Two Methods?
Taxpayers that want to change deduction methods between standard rates and actual expenses from year to year must follow special rules to prevent excess deductions. In this case it is highly recommended to always consult a tax professional for guidance.
How Do These Updates Impact Me?
If you drive frequently for business reasons as a sole proprietor, independent contractor, or employee, the boost to the business standard mileage rate may allow for greater deductions, potentially lowering your tax bill.
On the other hand, military members driving for medical or moving purposes will lose a small amount of deductions due to the 1 cent drop in the applicable rate.
Those volunteering for charities will not see any mileage rate differences in 2024.
Next Steps as Mileage Rates Change
Staying up to date on changes to IRS standard mileage rates each year is crucial for both individuals and businesses claiming related deductions. A minor rate change may have an impact on the bottom line and taxes owed or refunded.
Be sure to visit the IRS website for more information and, if unsure, consult a certified tax professional if you have questions as to the application of the updated rates or which deduction method is best for you or your business. Accurately claiming vehicle expense deductions keeps you compliant and optimizes your tax savings.
RJS LAW and its qualified, experienced Tax and Estate/Trust Planning attorneys are available to assist and answer your questions specific to the IRS Standard Mileage Rate 2024. For a free consultation concerning tax planning strategies, please call 619-595-1655 or contact us via the web at RJS LAW.
Disclaimer: This blog is intended to provide general information only and should not be construed as tax advice. Please consult with a qualified tax professional to discuss your specific circumstances.
Written by Devon J. Arabo, Esq., LL.M.