Understanding the Mileage Reimbursement Rate
Business Use: The rate stands at 67 cents per mile, marking a 1.5-cent increase from the 2023 rate. This rate is applicable to automobiles used for business purposes, encompassing cars, vans, pickups, and panel trucks.
Medical or Moving Purposes: For qualified active-duty members of the Armed Forces, the rate is now 21 cents per mile for medical or moving purposes, reflecting a 1-cent decrease from the 2023 rate.
Charitable Organizations: The rate for miles driven in service of charitable organizations remains steady at 14 cents per mile. This rate is statutorily set and typically does not undergo annual fluctuations.
These rates are applicable not only to traditional gasoline and diesel-powered vehicles but also to electric and hybrid-electric vehicles.
The standard mileage rate for business use is determined through an annual study considering both fixed and variable costs associated with operating an automobile. The rate for medical and moving purposes primarily factors in variable costs.
Changes in Tax Deductions
Under the Tax Cuts and Jobs Act, certain changes impact taxpayers’ ability to claim deductions related to vehicle use:
Employee Travel Expenses: Miscellaneous itemized deductions for unreimbursed employee travel expenses are no longer claimable.
Moving Expenses: Deductions for moving expenses are no longer available for most individuals, except for members of the Armed Forces on active duty moving under orders to a permanent change of station.
Options for Taxpayers
Taxpayers have the flexibility to choose between using the standard mileage rates or calculating the actual costs of using their vehicles. However, opting for the standard mileage rate may require selecting this method in the first year the car is available for business use. For leased vehicles, if the standard mileage rate is chosen, it must be applied for the entire lease period, including renewals.
Utilizing the IRS Mileage Reimbursement Rate 2024
The IRS mileage rate for 2024 aims to support individuals who use their personal vehicles for work-related activities and independently bear associated costs.
Self-Employed Individuals: If you’re self-employed, you can claim your business mileage for 2024 when filing taxes with the IRS in the subsequent year, allowing reimbursement for miles driven for business purposes.
Employed Individuals: The situation is more intricate for employed individuals. Due to the Tax Cuts and Jobs Act, employees cannot deduct mileage expenses from the IRS, even if their employer doesn’t compensate them for business-related travel. The sole financial recovery for personal business mileage expenses is through the employer.
While employees are generally advised to adhere to the official IRS mileage rate for 2024, employers are not legally obligated to follow this rate. They may reimburse at a lower rate or cover actual expenses, provided appropriate receipts are furnished as proof.
Official Documentation
Detailed information on these changes, including the maximum automobile cost for calculating allowances under a Fixed and Variable Rate (FAVR) plan and the fair market value for employer-provided automobiles, can be found in Notice 2024-08 PDF. These adjustments in mileage rates respond to ongoing changes in the economy and the cost of operating vehicles, ensuring that the rates remain equitable and reflective of actual expenses incurred by taxpayers.
