The 2025 mileage rate set by the IRS is a vital figure for taxpayers, businesses, and employees looking to track vehicle-related expenses. While the IRS mileage rates for 2025 have not yet been announced, the IRS typically releases new rates in mid-December. This guide will keep you informed and help you prepare to claim deductions or reimbursements effectively.
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Mileage Rates: 2024 & 2025 Comparison
Below are the current 2024 IRS mileage rates for reference. The rates for 2025 are pending release:
| Federal Mileage Rates | 2024 | 2025 |
|---|---|---|
| Business Use (cars, vans, pickups, panel trucks) | 67 cents per mile | Awaiting release (Dec. 2024) |
| Medical and Moving (Armed Forces active-duty) | 21 cents per mile | Awaiting release (Dec. 2024) |
| Charity Use | 14 cents per mile | Awaiting release (Dec. 2024) |
Who Can Use the 2025 Mileage Rate?
1. Self-Employed Individuals (1099 Workers)
If you’re self-employed, you can deduct vehicle expenses on your tax return by choosing between:
- The standard mileage rate for 2025.
- The actual expenses method (e.g., gas, maintenance, and insurance).
The standard mileage rate is easier to calculate and often preferred for its simplicity.
2. Employees (W-2 Workers)
Employees may receive mileage reimbursement from their employers, often using the IRS mileage rate. Keep in mind:
- Employers may reimburse at or below the IRS mileage rate.
- Amounts reimbursed above the mileage rate are taxable income.
- Due to the Tax Cuts and Jobs Act (2017), employees cannot claim mileage deductions if their employer does not reimburse them. This rule remains effective until January 1, 2026.
3. Employers
Employers can use the 2025 mileage rate to reimburse employees for business-related driving. Reimbursements above the IRS rate are considered a taxable benefit.
How Is the IRS Mileage Rate Set?
The IRS adjusts mileage rates annually, considering the rising costs of vehicle operation. The business mileage rate factors in:
- Fixed costs: insurance, registration fees, lease payments, and depreciation.
- Variable costs: gas, oil, maintenance, and tires.
For medical and moving purposes, only variable costs are considered. The charitable rate (14 cents per mile) is set by law and has not changed since 1998.
How to Claim the 2025 Mileage Rate
For the Self-Employed:
- Choose a deduction method:
- Standard mileage rate (per-mile deduction).
- Actual expenses method (total vehicle expenses).
- Keep accurate records of your miles driven for business purposes.
For Employees:
Ensure that your employer is tracking mileage reimbursement accurately. Use apps or detailed logs to verify business-related miles.
Automate Your Mileage Tracking
Manually logging miles can be tedious and prone to error. Consider using a mileage tracking app to:
- Automatically log trips in real time.
- Generate IRS-compliant mileage reports for tax filing or reimbursement.
- Simplify bookkeeping and maximize deductions.
Final Thoughts on the 2025 Mileage Rate
Although the IRS mileage rate for 2025 has yet to be announced, staying prepared is key to claiming the right deductions or reimbursements. Bookmark this guide—we’ll update it as soon as the new rates are available.
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Whether you’re self-employed, an employee, or a business owner, understanding and utilizing the IRS mileage rates can significantly reduce your taxable income or simplify employee reimbursements.
Stay tuned for the official 2025 mileage rate announcement this December!
