The Internal Revenue Service (IRS) has recently released the optional standard mileage rates for 2024. These rates are used to compute the deductible costs of operating an automobile for various purposes such as business, medical, charitable, or moving.
Effective from January 1, 2024, the standard mileage rates applicable to the use of a car, including vans, pickups, or panel trucks, are as follows:
- The rate for business use will be 67 cents per mile, marking an increase of 1.5 cents from the 2023 rate.
- The rate for medical or moving purposes for qualified active-duty members of the Armed Forces will be 21 cents per mile, reflecting a decrease of 1 cent from the previous year.
- The rate for service to charitable organizations remains unchanged at 14 cents per mile, as it is set by statute.
These rates apply to all vehicles, including electric and hybrid-electric automobiles, as well as those powered by gasoline and diesel.
The standard mileage rate for business use is derived from an annual study of the fixed and variable costs involved in operating an automobile. Conversely, the rate for medical and moving purposes is based on the variable costs alone.
It’s pertinent to note that following the Tax Cuts and Jobs Act, taxpayers can no longer claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Also, a deduction for moving expenses can only be claimed by members of the Armed Forces on active duty who are moving under orders to a permanent change of station.
While taxpayers have the option of calculating the actual costs of using their vehicle instead of using the standard mileage rates, there are certain stipulations. If opting for the standard mileage rate, this must generally be done in the first year the car is available for business use. In subsequent years, taxpayers can choose either the standard mileage rate or actual expenses. For leased vehicles, if the standard mileage rate is chosen, it must be used for the entire lease period, including renewals.
Notice 2024-08 provides further details on the optional 2024 standard mileage rates, the maximum automobile cost for calculating the allowance under a fixed and variable rate (FAVR) plan, and the maximum fair market value of employer-provided automobiles first made available to employees for personal use in 2024.
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