IRS Announces 2025 Standard Mileage Rates for Business, Medical, and Charitable Use

The Internal Revenue Service (IRS) has officially announced the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) for the 2025 tax year. These rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

Manufacturers, sales teams, service technicians, and many other businesses rely on these rates for calculating deductions related to vehicle use. Understanding the 2025 rates is essential for accurate tax planning and compliance.

The 2025 Standard Mileage Rates

Effective January 1, 2025, the standard mileage rates are:

• 69 cents per mile for business use.
• 23 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces.
• 14 cents per mile driven in service of charitable organizations (this rate is set by statute and may not change year-to-year).

Note: The deduction for moving expenses is currently suspended for most taxpayers until after 2025 due to the Tax Cuts and Jobs Act, except for members of the U.S. Armed Forces on active duty moving under orders to a permanent change of station.

Using the Standard Rate vs. Actual Expenses

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. This involves tracking actual expenses such as gas, oil, repairs, tires, insurance, registration fees, and depreciation (or lease payments).

Choosing the standard mileage rate is often simpler, requiring less detailed record-keeping beyond tracking mileage. However, calculating actual expenses may result in a larger deduction for some taxpayers, particularly those with higher vehicle operating costs or significant depreciation. You generally cannot switch back and forth easily between methods year-to-year for the same vehicle. Consult with your tax advisor to determine the best method for your situation.

Record Keeping Requirements

Whether using the standard rate or actual expenses, diligent record-keeping is essential to substantiate your deductions. For mileage-based deductions, maintain a log that includes:

• Dates of travel
• Starting and ending locations
• Business purpose of the trip
• Starting and ending odometer readings (or total miles driven)

Mileage tracking apps can simplify this process significantly.

Plan Accordingly for 2025

These updated standard mileage rates are important for budgeting, expense reimbursements, and tax calculations throughout 2025. Ensure your accounting systems and reimbursement policies reflect the new rates effective January 1, 2025.

Remember to maintain accurate mileage logs to support any deductions claimed on your tax return.