The optional standard mileage rate for automobiles driven for business will increase 3 cents in 2025, the Internal Revenue Service said Thursday, but the mileage rates for vehicles used for other purposes will stay unchanged from this year.
Optional standard mileage rates are employed to compute the deductible costs of operating vehicles for business, charitable and medical purposes, in addition to active-duty members of the Armed Forces who are moving.
Starting Jan. 1, 2025, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
70 cents per mile driven for business use, up 3 cents from 2024;21 cents per mile driven for medical purposes, the same as in 2024;21 cents per mile driven for moving purposes for qualified active-duty members of the Armed Forces, unchanged from last year; and,14 cents per mile driven in service of charitable organizations, equal to the rate in 2024.
The rates apply to fully electric and hybrid automobiles, in addition to gasoline and diesel-powered vehicles.
While the mileage rate for charitable use is set by statute, the mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes, meanwhile, is based on only the variable costs from the annual study.
Under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. And only taxpayers who are members of the military on active duty may claim a deduction for moving expenses incurred while relocating under orders to a permanent change of station.
Use of the standard mileage rates is optional. Taxpayers can instead choose to calculate the actual costs of using their vehicle.
Taxpayers using the standard mileage rate for a vehicle they own and use for business must opt to use the rate in the first year the automobile is available for business use. Then, in later years, they’re allowed to choose to use the standard mileage rate or actual expenses.
For a leased vehicle, taxpayers using the standard mileage rate must employ that method for the entire lease period, including renewals.
Notice 2025-05 provides the optional 2025 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. The notice also includes the amount taxpayers need to use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that can be used in computing the allowance under a fixed and variable rate plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2025 for which employers may use the fleet-average valuation rule in Section 1.61-21(d)(5)(v) or the vehicle cents-per-mile valuation rule in Section 1.61-21(e).
