IRS Raises Standard Mileage Rate To 70 Cents for 2025

[Vitalik_Dark]

Source: The College Investor


The IRS just released their standard mileage rates for 2025. There was an increase of 3 cents from 2024 for the standard business rate, while medical, moving, and charity rates remained the same.

Each year, the IRS publishes new standard mileage rates in a Notice in December for the new year. There are separate mileage rates for operating an automobile for business, charitable, medical or moving purposes.

For 2025, the IRS Mileage rates increase across the board, where legally allowed. The business mileage rate is the highest its ever been.

This will impact many areas, including employer reimbursement rates, college cost of attendance, and more.

Here's what to know about the new 2025 IRS Standard Mileage Rates.

IRS Mileage Rates For 2025​

The new IRS mileage rates for 2025 are 70 cents per mile for business purposes (up from 67 cents per mile in 2024), 21 cents per mile for medical or moving purposes and 14 cents per mile for charitable purposes.

The new mileage rates for business and medical/moving purposes are set annually by the IRS based on the cost of gasoline, and changes in fuel economy and insurance.

The rate for charitable purposes is set by law and does not change. [26 USC 170(i)]

You cannot deduct personal use of a vehicle.

You can deduct the actual cost of business mileage instead of the mileage rate if you document the expenses. The cost might be higher if you drive a low-mileage vehicle and/or a vehicle with higher insurance costs.

What Is Included In The IRS Mileage Rate?​

The IRS mileage rates are the same for all types of cars, including internal combustion engine (ICE), hybrid and electric vehicles (EV). The mileage rates are the same for cars, vans, pickup trucks and small delivery trucks.

This benefits drivers of EVs and hybrid vehicles, since the cost of “fuel” for an EV is lower than the cost of fuel for a hybrid or ICE vehicle, and hybrid vehicles get better mileage than ICE vehicles.

The mileage rate includes all incremental costs of operating a vehicle. This includes the cost of gas, maintenance (including oil and tires), and repairs. It also includes the cost of insurance, registration fees, lease payments and depreciation. It does not include the cost of parking and tolls.

The part of the mileage rate for business purposes that is attributable to depreciation is 33 cents per mile in 2025. That’s up from 30 cents per mile in 2024 and 28 cents per mile in 2023.

The mileage rates are the same throughout the country.

Reimbursement Rates For Employees​

There is no obligation for a business to use the IRS mileage rates to reimburse employees for business travel by car. But, most businesses do use the IRS mileage rates.

As a result, many employees will see higher reimbursement rates next year.

College Cost Of Attendance​

The college cost of attendance includes an allowance for transportation that is supposed to cover the cost of traveling between home, school and work.

It can also include other costs for transportation that are part of the student’s program, such as transportation to conferences and practicums.

The transportation allowance cannot include the cost of purchasing a vehicle.

Many colleges use a standard transportation allowance for all students. However, if a student documents the distance from home to school and work is greater than the standard allowance, some colleges will use the IRS business mileage rate for calculating the transportation allowance, especially for commuter students.

However, if public transportation is available, the college may use the cost of a bus or train pass, since it is usually lower. Some colleges provide free bus passes to all their students, sometimes built into the student ID.

Several Itemized Deductions Are Temporarily Suspended​

The Tax Cuts and Jobs Act of 2017 temporarily eliminated miscellaneous itemized deductions and the deduction for moving expenses. This prevents employees from claiming a deduction for unreimbursed business travel expenses and the cost of relocation.

This provision will sunset on December 31, 2025. Starting in 2026, taxpayers will be able to claim miscellaneous itemized deductions that are in excess of 2% of Adjusted Gross Income (AGI) and unreimbursed moving expenses.

Members of the U.S. Armed Forces who are serving on active duty can, however, still deduct moving expenses now if they move because of a permanent change of station. Members of the Military Reserves can also claim the deductions now if they are performing services more than 100 miles away from home.

Certain other taxpayers can deduct unreimbursed travel expenses by including them as an adjustment to income in Part II of Schedule 1 of IRS Form 1040, as opposed to listing them as itemized deductions on Schedule A.

• State and local government officials who are paid on a fee basis
• Performing artists
• Elementary and secondary school teachers

Self-employed taxpayers may be able to deduct their travel expenses as a business expense on their federal income tax returns (e.g., Schedule C for sole proprietorships, Schedule K-1 (IRS Form 1065) for partnerships or IRS Form 1120 or IRS Form 1120S for corporations).

Historical IRS Mileage Rates​

Here are the historical IRS mileage rates for context, broken out by business mileage, charity mileage, and medical or moving mileage.

Historical IRS Mileage Rates. Source: The College Investor

More About This Table​

Here is an HTML version of the Historical IRS Mileage Rate chart:

Historical IRS Mileage Rates​
Year​	Business​	Charity​	Medical or Moving​
2025​	70​	14​	21​
2024​	67​	14​	21​
2023​	65.5​	14​	22​
Jul - Dec 2022​	62.5​	14​	18​
Jan - Jun 2022​	58.5​	14​	18​
2021​	56​	14​	16​
2020​	57.5​	14​	17​
2019​	58​	14​	20​
2018​	54.5​	14​	18​
2017​	53.5​	14​	17​
2016​	54​	14​	19​
2015​	57.5​	14​	23​
2014​	56​	14​	23.5​
2013​	56.5​	14​	24​
2012​	55.5​	14​	23​
Jul - Dec 2011​	55.5​	14​	23.5​
Jan - Jun 2011​	51​	14​	19​

Editor: Robert Farrington

Reviewed by: Ashley Barnett


The post IRS Raises Standard Mileage Rate To 70 Cents for 2025 appeared first on The College Investor.
Full story here:

To view the content, you need to Sign In or Register.