IRS Mileage Rates for 2025: What You Need to Know

If you use your vehicle for business, medical, moving, or charitable purposes, you’ll want to take note of the IRS’s new standard mileage rates for 2025.

Here’s everything you need to know about the updated mileage rates, their implications, and how MyCarTracks, seamlessly integrates these changes into your mileage tracking and reporting.

What Are the New Mileage Rates for 2025?

The IRS has announced the following standard mileage rates for 2025:

• Business use: 70 cents per mile (up from 67 cents in 2024).
• Medical or moving purposes: 21 cents per mile (unchanged from 2024).
• Charitable purposes: 14 cents per mile (unchanged).

The increase in the business mileage rate highlights rising vehicle operation costs, offering some financial relief to those who rely heavily on their vehicles for work.

Issued in Notice-2025-5 on December 19, 2024, it covers the business use of a vehicle (cars, vans, pickups, and panel trucks) and will come into effect on January 1, 2025.

Understanding MyCarTracks in the Context of New Mileage Rates

MyCarTracks provides a cutting-edge and intuitive platform for tracking business mileage with precision. It’s an ideal solution for self-employed individuals and businesses managing fleets, ensuring compliance with IRS standards.

Why the 2025 Increase Matters

The increased standard mileage rate for business use directly benefits drivers by allowing them to deduct more on their taxes. Here’s why this matters:

1. Offset Rising Costs: With vehicle operation expenses continuing to climb, the higher rate helps cover a larger share of these costs.
2. Tax Benefits: The standard mileage rate is a simplified method of claiming deductions, avoiding the complexity of itemizing expenses like fuel and maintenance.
3. More Earnings: Self-employed individuals and others who qualify can retain more income by reducing their taxable earnings.

Real-World Examples of Mileage Deductions

To illustrate the benefits, let’s look at two scenarios:

1. Delivery Driver Example:
   • A delivery driver logs 10,000 business miles in 2025.
   • At 70 cents per mile, their deduction totals $7,000, compared to $6,700 in 2024.
   • This results in $300 more in deductions, directly reducing their taxable income.
2. Multi-Purpose Driver Example:
   • A driver logs 15,000 miles annually, broken down as follows:
     • 10,000 miles for business: $7,000 deduction.
     • 3,000 miles for medical: $630 deduction.
     • 2,000 miles for charity: $280 deduction.
   • Total deduction: $7,910 for 2025, compared to $7,610 in 2024. That’s an extra $300 saved.

Eligibility and Limitations

Not everyone can claim mileage deductions. Here’s who qualifies and the rules they need to follow:

1. Self-Employed Individuals (1099)
   • If you’re self-employed, you can deduct mileage for business-related travel. This includes trips to clients, meetings, and job sites.
2. W-2 Employees
   • Due to the Tax Cuts and Jobs Act, W-2 employees generally cannot deduct mileage for work-related travel until 2026.
3. Exceptions
   • Specific groups, such as reservists, performing artists, and fee-based government officials, can still claim mileage deductions under certain conditions.
4. Employers
   • Employers may reimburse employees for mileage. Reimbursements up to the standard rate are non-taxable, while amounts exceeding it are taxable.

Tips for Maximizing Your Mileage Deductions

To make the most of the IRS’s standard mileage rates, consider the following tips:

1. Track Mileage Accurately:
   • Use mileage tracking apps like MyCarTracks to log your trips effortlessly.
   • Record the purpose of each trip and the starting and ending odometer readings.
2. Maintain Detailed Records:
   • Keep receipts and logs for at least three years in case of an audit.
   • Document vehicle-related expenses if you’re considering switching to the actual expense method in future years.
3. Plan Business Trips Wisely:
   • Combine multiple stops into a single trip to maximize deductible mileage.
   • Avoid personal errands during business trips to keep records clean and compliant.

FAQs About Mileage Rates

1. Can I use the standard rate for motorcycles?
   • No, motorcycles require using the actual cost method for deductions.
2. Is mileage reimbursement taxed?
   • Reimbursements are only taxed if they exceed the standard business mileage rate.
3. Does the mileage rate cover electric and hybrid vehicles?
   • Yes, the IRS mileage rate applies to electric, hybrid, and traditional gas or diesel vehicles.
4. How often does the IRS adjust mileage rates?
   • The IRS typically adjusts rates annually. However, mid-year adjustments can occur during periods of significant operating cost changes.
5. Can I switch between the standard mileage rate and the actual cost method?
   • Once you choose a method for a vehicle in a tax year, you must continue using it for the life of that vehicle.

Conclusion

The IRS’s new mileage rates for 2025 bring good news for drivers, especially those using their vehicles for business purposes. The increase in the business rate to 70 cents per mile provides a valuable opportunity to save more on taxes.

Start preparing now by tracking your mileage, maintaining accurate records, and exploring tools like MyCarTracks to simplify the process. With proper planning, you can maximize your deductions and make the most of the 2025 mileage rates.

For more information, consult the IRS guidelines or speak with a tax professional. Happy driving and saving!