Published Dec 15, 2023 – The Internal Revenue Service has recently released the 2024 optional standard mileage rates, which are utilized in computing the deductible expenses associated with operating an automobile for business, charitable, medical, or moving purposes.
Effective from January 1, 2024, the standard mileage rates for the use of a car (including vans, pickups, or panel trucks) will be as follows:
- 67 cents per mile driven for business use, reflecting an increase of 1.5 cents from 2023.
- 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, indicating a decrease of 1 cent from 2023.
- 14 cents per mile driven in service of charitable organizations; this rate is statutorily defined and remains unchanged from 2023.
These rates are applicable to electric and hybrid-electric vehicles, as well as conventional gasoline and diesel-powered automobiles.
The standard mileage rate for business use is figured out by using an annual assessment of both fixed and variable costs associated with operating a vehicle. On the other hand, the rate for medical and moving purposes is determined based on varying costs.
It’s worth noting that under the Tax Cuts and Jobs Act, taxpayers are ineligible to claim miscellaneous itemized deductions for unreimbursed employee travel expenses. Moreover, deductions for moving expenses are generally not allowed, except for members of the Armed Forces on active duty who are relocating under orders to a permanent change of station. Further details are available here: Moving expenses for members of the armed forces.
Taxpayers retain the flexibility to calculate the actual costs of using their vehicle rather than relying on the standard mileage rates. Although taxpayers can use the standard mileage rate, they typically must choose to do so in the first year the car is available for business use. In subsequent years, they can opt for either the standard mileage rate or actual expenses. For leased vehicles, the standard mileage rate method must be used for the entire lease period (including renewals) if this rate is selected.
For detailed information on the optional 2024 standard mileage rates, as well as the maximum automobile cost for calculating the allowance under a fixed and variable rate (FAVR) plan, please refer to Notice 2024-08PDF. The notice also outlines the maximum fair market value of employer-provided automobiles first made available to employees for personal use in the calendar year 2024, for which employers may apply either the fleet-average valuation rule or the vehicle cents-per-mile valuation rule.
Contributor: Tony Bostian
Original: IRS issues standard mileage rates for 2024, IRS.gov