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Redpath and Company
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January 3, 2025
Drivers who rely on vehicles for regular business use will see a slight increase in deductible mileage rates in 2025.
The Internal Revenue Service (IRS) has issued the 2025 standard mileage rates and other amounts used to calculate deductible vehicle expenses (IR 2024-312, 12/19/2024; Notice 2025-05, 2025-4 IRB).
The standard mileage rates provide an optional method for taxpayers to calculate the deductible costs of operating a vehicle for business, charitable, medical, and moving purposes. Starting January 1st, 2025, taxpayers can also use the actual-costs method.
For 2025, the standard mileage rates for cars, vans, pickups, or panel trucks will be:
These rates apply to gasoline, diesel, hybrid, and fully electric automobiles.
The Tax Cuts and Jobs Act (TCJA) prohibits claiming unreimbursed work travel expenses as itemized deductions through 2025. This restriction makes employer reimbursement policies significant for employees who use their personal vehicles for business purposes.
Business owners and employees should retain detailed records of their vehicle use and expenses throughout the year. The standard rates make calculations easier, but thorough documentation ensures timely tax filings and limits costly audits. Consult with a qualified tax professional like Redpath and Company for specific guidance on vehicle expense deductions and reimbursements.
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