IRS Boosts 2025 Business Mileage Rate to 70 Cents per Mile

IRS raises standard mileage rate for business use in 2025; key rate increases by 3 cents to 70 cents per mile

The Internal Revenue Service has announced that the optional standard mileage rate for business-related vehicle use will rise by 3 cents in 2025, bringing the rate to 70 cents per mile. Mileage rates for vehicles used for other purposes will remain unchanged from 2024.

The optional standard mileage rates are employed to calculate deductible costs associated with operating vehicles for business, charitable, medical, and certain military purposes.

Effective 1 January 2025, the standard mileage rates for cars, vans, pickups, and panel trucks will be as follows:

• 70 cents per mile for business use, an increase of 3 cents from 2024.
• 21 cents per mile for medical purposes, unchanged from 2024.
• 21 cents per mile for moving purposes for qualified active-duty military members, the same as 2024.
• 14 cents per mile for charitable purposes, consistent with the 2024 rate.

These rates apply to fully electric, hybrid, gasoline, and diesel vehicles.

While the charitable mileage rate is set by law, the business mileage rate is determined annually based on a study of the fixed and variable costs of operating a vehicle. The rates for medical and moving purposes are derived solely from the variable costs in this study.

Under the Tax Cuts and Jobs Act, taxpayers are not allowed to claim a miscellaneous itemised deduction for unreimbursed employee travel expenses. Only active-duty military personnel may deduct moving expenses, and only when relocating under orders for a permanent change of station.

The use of standard mileage rates is optional. Taxpayers may instead calculate the actual expenses incurred for vehicle use.

Taxpayers using the standard mileage rate for a vehicle they own must elect to do so in the first year the vehicle is used for business purposes. In subsequent years, they can choose between using the standard mileage rate or actual costs. For leased vehicles, however, the standard mileage rate must be used for the entire lease term, including renewals.

Notice 2025-5 outlines the optional standard mileage rates for 2025, including the maximum automobile cost used for reimbursement calculations under fixed-and-variable rate (FAVR) plans. It also specifies the maximum fair market value of employer-provided vehicles first available to employees for personal use in 2025, applicable to cents-per-mile or fleet-average valuation methods.