The new standard mileage rate in 2024 per the Internal Revenue Service is 67 cents per mile, an increase of 2.3% over the previous year.
This is the standard rate employees can submit to their employer for non-taxable business mile reimbursements for travel in 2024.
These rates apply to all automobiles, regardless of the fuel type (gas, diesel-powered vehicles, hybrid-electric automobiles and electric).
You can see the official IRS notice made on December 14, 2023 at the IRS website. The announcement also includes the new rates for mileage related to charitable activities (14 cents per mile) and medical purposes (21 cents per mile).
Below is a table of the IRS standard business mileage rates over the last five years, including the recent announcement.
IRS Standard business mileage rates 2020 – 2024
|IRS standard business mileage rate
|% increase / (decrease) over the prior rate
|$0.670 per mile
|$0.655 per mile
|July – Dec 2022
|$0.625 per mile
|Jan – June 2022
|$0.585 per mile
|$0.560 per mile
|$0.575 per mile
IRS rate review comments
As you can see on the chart above, during the height of the Covid19 pandemic (2020 – 2021), the rates were lowered to reflect the decrease in motor vehicle costs over that period.
Then, in 2022, with the big spike in costs, the rate was increased twice that year in an attempt to keep up with inflation.
2023 also saw a sizable increase of 4.8%. The rate for 2024 was set 2.3% higher than 2023, which is a modest annual increase.
How does the IRS determine the new rates
The Internal Revenue Service explains that it uses a third party independent contractor to evaluate vehicle costs via an annual study to determine the standard mileage rate for the next calendar year.
We know that the standard mileage rate is supposed to represent the rate per mile to operate a car, which includes both fixed and variable costs.
The IRS does provide the depreciation component of the rate, which is one of the fixed costs. It also states that “the rate for medical and moving purposes is based on the variable costs.” So, having both of these numbers gives us an idea of the component dynamics of the overall rate.
The vehicle depreciation component of the rate is now 30 cents per mile in 2024, up from 28 cents per mile in 2023, a 7.1% increase. The variable driven medical reimbursement rate decreased one cent per mile, or 4.5%, which tells us variable costs are expected to have a deflationary impact.
Getting reimbursement for the business use of a personal vehicle
As a general rule, if as an employee you drive for business purposes with your own car, you qualify for the reimbursement of travel expenses. This does not include your normal commute from your home to and from work, which is considered personal use mileage.
A best practice for expense reimbursement is for the employee to submit an expense report to their employer for their business mileage. The employer then reviews and reimburses the employee for mileage incurred in accordance with the company mileage reimbursement policy.
Keep good records to qualify
It is important to keep good records to support the business travel and mileage. Mobile apps are used by more frequent business travelers to ensure that there are accurate records on each trip.
In order for the reimbursements at the standard mileage rate to be non-taxable, be sure to abide by the following:
- Your expenses must have a business connection (not personal)
- You must keep records (mileage log) and provide that to your employer in a reasonable period of time
- You must return any excess reimbursements in a reasonable period of time
You can read more about these rules and requirements in IRS Publication 463 (Travel, Gift and Car Expenses). The publication also includes other methods that can be used for the business use of vehicles, including choosing to account for actual costs instead of using the standard rate.
Your employer determines what your mileage reimbursement rate is going to be. It will be defined in your company’s mileage reimbursement policy. If the reimbursement amount is at the standard IRS rate, there won’t be any tax implications.
However, if your employer reimburses you at a higher rate, the excess will be considered taxable income for you.
If you are paid less than the IRS standard mileage, you will take a loss on the shortage. In addition, the current tax law does not let you take an itemized deduction for these unreimbursed employee travel expenses. You can read more about this on the IRS website.
In this case it is fair to ask your employer to make you whole for your business mileage, as the IRS rate is based on a reasonable cost per mile to operate an automobile.
Executive Summary: 2024 IRS Standard Mileage Rate is 67 cents per mile
- The new rates, effective January, 2024 are now 67 cents per mile, an increase of 2.3%, or 1.5 cents, over the current rates
- The rate is the same for all autos, regardless of the type (gas, electric, hybrid vehicles, diesel)
- The five year history chart above shows the rate changes, which correlates with the economic environment over that time
- 2022 had a rare mid-year increase in the rate due to the high inflation during that time period
- The IRS uses a third party to do an annual study to determine the standard mileage rate
- Be sure to keep good documentation of business mileage in order to ensure your reimbursements are non-taxable
- Reimbursement above the standard rate is considered compensation
- If your reimbursement is lower than the standard rate, you cannot take an itemized deduction under the current tax law