The federal mileage rate, also known as the standard mileage rate, is a rate set by the Internal Revenue Service (IRS) for calculating deductible business and travel expenses related to the use of personal vehicles. This rate is updated annually and serves as a standard guideline for individuals and businesses when it comes to claiming reimbursement for mileage expenses on their tax returns.
What are the benefits of using the federal mileage rate?
The standard rate comes with a few advantages. It:
- Simplifies the process of calculating mileage expenses by providing a standard rate that is easy to apply.
- Helps individuals and businesses save time and effort by eliminating the need for detailed record keeping and complex calculations.
- Can result in significant tax savings, as the deduction for mileage expenses can be claimed against taxable income.
What is the federal mileage rate for 2024?
The federal mileage rate varies based on travel purposes. The 2024 rates are as follows:
- $0.67 per mile driven for business use
- $0.21 per mile driven for medical or moving purposes for active-duty military
- $0.14 per mile driven in the service of charitable organizations
How is the federal mileage rate determined?
The IRS states that the federal mileage rate is “based on an annual study of the fixed and variable costs of operating an automobile.” Factors taken into consideration include gas prices, vehicle depreciation, and maintenance costs. The federal mileage rates apply to cars, vans, pickups or panel trucks, as well as electric and hybrid vehicles.
Using the federal mileage rate in your tax return
In order to claim mileage expenses using the federal mileage rate, individuals and businesses must keep accurate records of their business-related travel. This includes dates, locations, purpose of travel, and number of miles driven. These records are essential for supporting the deduction claimed on tax returns and may be required in case of an IRS audit.
