What Are the Standard Mileage Deduction Rates & Rules?

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What Is Mileage Deduction?

A mileage deduction refers to the money paid back to an individual who uses their private vehicle for business purposes. The deduction is usually in the form of tax relief or rebate.

You can calculate your mileage deduction, either using the standard IRS mileage rate or by working out your actual expenses.

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The standard mileage rate is a universal rate that covers all the costs associated with tax-deductible mileage. It is set based on an annual study of the fixed and variable costs of owning and running a vehicle in the U.S.

The IRS mileage rate is subject to revision and changes every year to suit prevailing circumstances better.

There is no limit to the deductions you can claim on your taxes. All you need to do is follow all the IRS rules and have a compliant mileage report.

What is the Standard IRS Mileage Rate for 2024?

According to Notice 2024-08 from the IRS, the standard car mileage rates in 2024 are:

  • $ 0.67 per mile for business usage
  • $ 0.14 per mile for charitable work
  • $ 0.21 per mile for medical transport expenses
  • $ 0.21 per mile when moving for military personnel

Note that the IRS mileage rates are optional. They merely serve as a guideline for mileage reimbursement and deductions.

The IRS does not require anyone to use these rates when working out their mileage deductions.

Mileage Reimbursement vs. Mileage Deduction

Mileage reimbursement refers to the amount an employer or client pays you for your business mileage.

Mileage tax deduction, on the other hand, refers to the write-off you claim on your annual tax returns for your business mileage.

Both mileage reimbursement and deduction offer tax breaks that help offset the costs of operating your vehicle for work. And for both, you will need to track your mileage or maintain a mileage log that meets the IRS’ documentation requirements.

Note that the IRS doesn’t require employers to reimburse you for your business mileage. There is no federal law that mandates the IRS mileage rate for non-governmental employees.

What are the Rules of Mileage Deduction?

Even if you use your vehicle every day for various work-related purposes, you might still not qualify for mileage reimbursement. It’s crucial to understand the applicable guidelines before trying to claim compensation.

Here is a guide to help you establish whether you’re eligible for reimbursement based on the current IRS rates.

Mileage Reimbursement for Business Use

If you use your private vehicle for work-related purposes, you may be able to deduct some of your car-related expenses from your taxes. The good news is this applies to employers, employees, and even self-employed people.

But before filing for reimbursement, acquaint yourself with the fine print details in your employer’s policy. Different rules dictate who can claim business mileage reimbursement and when.

For instance, if your employer’s policy does not cover your travel expenses, you can’t claim an itemized deduction for business mileage or any other unreimbursed expenses.

Go through Publication 535 to find all the relevant information about the process of mileage and expense deductions. The IRS is very particular about when you may claim a mileage deduction from your business miles.

So, although these deductions apply to workers under IRS tax form 1099, it’s important to point out that W-2 employees can also be eligible in some circumstances.

For instance, as a W-2 worker, you are only allowed to deduct mileage that you have itemised, and the said deduction adds up to more than 2% of your adjusted gross income.

Here are the drives the IRS considers tax-deductible mileage:

  • Drives from your primary place of business to another place of business – Any time you visit a different location to continue with your work, you can claim the mileage as a travel expense.
  • Driving to seek a job in the same industry – Whenever you drive from your home to look for work in the same industry as the previous job that you were engaged in, you are allowed to make deductions for the miles incurred.
  • Supply Runs – Any drive that you make that is business-related is considered a business drive and it is deductible. For example, if you make a supply run, visit a post office, and go to the bank, the mileage incurred will be tax deductible.
  • Driving to Business Luncheons and entertainment – If you drive to meet a client, a vendor or a business colleague over lunch, that is regarded as a business drive. Also, if you entertain business colleagues, vendors, or clients during a restaurant happy hour and you drive to the restaurant, that mileage is tax deductible.
  • Visiting customers – When you drive from the office to a customer’s site, you are qualified to make the mileage deduction from your taxes. Note that this is NOT a drive from your home to a client site.
  • Drive to and from the airport – The IRS considers travel to and from the airport as business travel and hence it is an allowable deduction. This is regardless of whether you drove to the airport from home or the office.
  • Drive to odd jobs – Sometimes workers combine their regular job with a side hustle such as lawn mowing, babysitting, Uber driving etc. You can deduct such miles from your taxes.
  • Driving between temporary job sites – Whenever you drive from home to a temporary job location, you qualify to log those miles for your tax deduction. According to the IRS, a job that lasts for less than one year is temporary.

Furthermore, the IRS provides a more extensive guideline for deductible business mileage and expenses.

The table below details some of the allowable mileage expenses:

Travel Expenses tables
Screenshot from: IRS.gov

You should also make use of a mileage tracking app to track all your business-related expenses. A mileage tracker makes expense monitoring a lot easier. It also captures all eligible expenses so that nothing falls through the cracks when you’ve had a long day at work.

Mileage Reimbursement for Medical Use

In addition to business use, you may be able to deduct some of your vehicle expenses if you use your car for medical purposes. For instance, if you have a medical condition that requires regular trips to the hospital.

In this case, you should track your mileage and expenses associated with the visits. You can then claim mileage deductions using the standard medical rate or through an itemized deduction.

Keep in mind, however, that to qualify for medical mileage reimbursement, you need to also file for a medical expense deduction on your taxes. And to be eligible for these deductions, your total medical expenses must amount to at least 7.5 percent of your gross income.

Mileage Reimbursement for Charitable Works

With this option, you can only claim deductions for unreimbursed out-of-pocket expenses incurred while using your car for work.

Furthermore, the work must be for an organization the IRS recognizes as charitable.

As with the other expenses, you can choose whether to itemize your deductions or opt for the standard charitable works mileage rate.

Find out more about how charity work will affect your taxes and mileage reimbursement in Publication 526.

Mileage Reimbursement When Moving for the Military

You can qualify for mileage reimbursement if you’re a member of the US military on active duty, moving in response to a military order or station change.

The IRS allows you to claim a portion of the costs you incur on any vehicle you use to facilitate the move, on top of the other moving-related expenses. But in this case, you can only use the standard military mileage rate to work out your deductions.

Note that this deduction is only available to the active members of the US armed forces. The Tax Cuts and Jobs Act suspended any other job-related moving expenses from being tax-deductible. This rule remains in effect between December 31, 2017, and January 1, 2026.

How to Calculate Your Mileage Deductions

In 2024, you can write off $0.67 for every business mile you drive. You have three options for working out your mileage deduction.

  1. The Standard Mileage Rate
    Here, you calculate your mileage deductions by multiplying your mileage for the year with the standard IRS rate for that year.
    For example, if your total business mileage is 20,000 miles:
    $0.67 x 20,000 = $13,400
  2. The Actual Expense Method
    Here you keep track of the actual expenses incurred while using your car for business-related travel. Your employer can then reimburse you for these expenses.
  3. The Lump Sum Method
    A lump-sum payment is also known as a per diem, gas allowance, or car allowance. The lump-sum payment is simply a fixed amount paid to the employee for all automobile expense reimbursement.

If you are new to mileage deduction, you are advised to use the Standard Mileage Rate method of deducting taxes. This is because the only record you need to provide to the IRS is the total mileage for business.

Regardless of your chosen method, to claim your mileage deductions, you will need an accurate record of your mileage throughout the year.

The IRS accepts different documentation as proof of mileage. Some of these documents include the mileage log book, the mileage sheets, the mileage log, and the mileage books.

The IRS also accepts the digital versions of these logs. Ensure your digital documentation contains all the necessary details.

Remember that the digital mileage log is easier to store for up to five years. A physical mileage log can be easily damaged, and you will be left without the documentation you need in case the IRS raises queries about your tax deductions.

That’s why it is highly recommended that you keep the evidence of your mileage for not less than five years and to use a trustworthy mileage tracking app.

How Many Miles Can You Claim on Your Taxes?

There is no limit to the number of miles you can claim on your taxes, as long as you can substantiate them.

The IRS will require you to provide the following details:

  • Total miles covered by the vehicle
  • Total miles for business purposes
  • A list of all the places that you visited during a business trip
  • The objects for which you made those business trips

Never forget to include the total miles covered during the year as this will indicate to the IRS the total miles driven for business purposes and the total driven for personal purposes.

Although the IRS will be satisfied by the contemporaneous records, always ensure you have sufficient documents to prove your case for deducting the business miles against your tax.

However, keep in mind that some claims may cause concern with the IRS. These include:

This is where a mileage logging app comes in to save the day.

With its efficiency and reliability, the app helps you log your business mileage so you can make significant deductions with your tax file returns. It also ensures you avoid an inconvenient Internal Revenue Service audit.

Limitations on the Standard IRS Mileage Rate

The IRS has restrictions on who can use the standard IRS mileage rate. For those who don’t qualify to use the standard rate, they may use the actual expense method instead.

To use the standard rate, you must use it during the first year you use your car for business. If you don’t, you will be stuck using the actual expense method. But if you use the standard mileage rate in the first year, you can switch between the two modes.

Note that with the standard IRS mileage rate, you cannot deduct your actual operating costs. The IRS factors in all these items as well as depreciation when determining a suitable standard rate for any given year. Furthermore, you cannot deduct your parking tickets or the cost of parking your car at your place of work.

TCJA Limitations on Itemized Deductions

The Tax Cuts and Jobs Act (TCJA) briefly suspended miscellaneous itemized deductions contingent on the 2 percent floor until 2026. The suspension covers most itemized deductions for unreimbursed business expenses like the cost of driving for work, and travel expenses.

However, the suspension does not apply in certain circumstances. Rev. Proc. 2019-46 modifies Rev. Proc. 2010-51 concerning the following items:

You cannot use the IRS mileage rate to claim a miscellaneous itemized deduction during the suspension period

  • You cannot claim miscellaneous itemized deductions for parking fees and tolls for the business use of your car
  • The depreciation used in calculating the basis reduction for your car when used for work is adjusted
  • Your car allowance is treated as paid under a non-accountable plan regardless of whether you incur deductible expenses.
  • Your deductible expenses when computing your adjusted gross income can use the standard IRS mileage rate. But you cannot claim an itemized deduction for unsubstantiated amounts.

Rev. Proc. 2019-46 outlines the guidelines on how much of your travel expenses an employer can reimburse using mileage allowance. However, you can substitute it with the actual expense method if you maintain an adequate record of your travel expenses.

FAVR Guidelines and Mileage Deductions

The Fixed and Variable Rate (FAVR) allowance plan is a reimbursement plan that outlines the rules for mileage tax deductions for businesses that choose not to use the standard mileage rate.

The plan takes into account the costs of owning and running a car, such as depreciation, insurance, and taxes. These are then adjusted according to the percentage use of the car for business, and location-specific costs for more accurate mileage reimbursement payments.

The policy reimburses employees through a combination of monthly allowances and mileage reimbursements.

The FAVR comprises two payment methods:

  • Periodic Fixed Payments
    This includes the fixed costs of owning and operating a vehicle. These include depreciation, insurance, registration, and taxes.
  • Periodic Variable Payment
    This includes the operating costs of a car like gasoline, oil changes, and routine maintenance.

According to the FAVR plan, the cost of the vehicle should not exceed the maximum amount set by the IRS. In 2024, the amount is $62,000.

One of the key advantages of the FAVR is that you can tailor it to your specific costs and actual mileage. In areas with higher operational costs, this is invaluable as the FAVR allowance may be more than the standard IRS mileage rate.

Rev. Proc. 2019-46 states that an employer can only give a FAVR allowance to an employee who can substantiate records showing at least 5000 business miles over a given tax year. For a higher mileage, then the employer may use 80 percent of their estimated annual business mileage to calculate the FAVR.

If the FAVR covers an employee for less than a year, the employer can allocate these limits every month.

How to Track Your Mileage

No matter your preferred mileage deduction method, an accurate mileage tracking system is vital.

GOFAR provides one such system. It offers an IRS mileage tax deduction rate-compatible mileage tracker capable of tracking your business and personal miles. And it makes it possible to tag and distinguish between the two.

This mileage tracking app also offers you the ability to generate and export a spreadsheet record of your mileage for easier mileage deductions. Other areas where the mileage app can help you include:

  • Finding fault in your car’s engine and notifying you of the same
  • Explaining engine malfunctions in plain English
  • Reminding you when to pay insurance

Visit gofar.co today to download the GOFAR mileage tracker.

Track Work Mileage With GOFAR

  • Log, calculate and export business expenses at the press of a button
  • No cancellation fees
  • Available on iOS and Android

Get GOFAR now

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Danny Adams sitting in a chair with a laptop

Danny Adams

Co-founder of GOFAR and with a Computer Science background from Harvard University, and a Bachelor of Aerospace, Aeronautical & Astronautical Engineering (Honours), UNSW. I want to transform data from cars into useful services so -> drivers save time & money -> emissions fall -> Australian roads are safer. So we built an ATO-compliant logbook app called GOFAR. I write to help you understand how to use GOFAR to maximise business travel. Reach out via support@gofar.co.

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This content is provided for general information purposes only and does not constitute professional advice from GOFAR. We recommend consulting with an independent legal, taxation, or financial expert to ensure the information is applicable to your specific situation. Please note that relevant regulations and laws may evolve over time.
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