WASHINGTON, D.C. — The Internal Revenue Service (IRS) has announced updated optional standard mileage rates for 2025, affecting taxpayers using automobiles for business, medical, moving, and charitable purposes. The most notable change is a three-cent increase in the rate for business travel.
Effective January 1, 2025, the standard rates are as follows:
- 70 cents per mile for business use, up from 67 cents in 2024.
- 21 cents per mile for medical and qualified moving purposes, unchanged from last year.
- 14 cents per mile for charitable purposes, steady at the statutory rate.
These rates apply to cars, vans, pickups, and panel trucks, including fully electric and hybrid vehicles. The increase in the business rate reflects the rising fixed and variable costs of operating automobiles, as determined by the IRS’s annual review. However, rates for medical and moving purposes remain unchanged, as they are based solely on variable costs.
Taxpayers choosing to use the standard mileage rates must adhere to specific rules. For example, the standard rate must be applied in the first year a taxpayer uses a vehicle for business. Deductible moving expenses are restricted to active-duty military members relocating under official orders. Meanwhile, charitable mileage rates remain fixed by law and are unaffected by external cost studies.
The IRS emphasizes that using the standard mileage rates is optional. Taxpayers may alternatively calculate actual expenses for vehicle operation if they find it more advantageous. For leased vehicles, however, the chosen method must remain consistent throughout the lease period.
Further details, including the maximum automobile cost for fixed and variable rate plans and valuation rules for employer-provided vehicles, are outlined in IRS Notice 2025-5. This update provides clarity for taxpayers planning their 2025 deductions and vehicle-related expenses.
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