How Is The IRS Standard Mileage Rate Set? | Guide To Mileage (2024)

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What is the IRS mileage rate?

The IRS mileage rate, also known as the federal mileage rate is set each year and is meant to help those who use their personal vehicles for business purposes get reimbursed for those expenses.

The rate set by the IRS represents the maximum rate per mile an employer can reimburse their employees at, without it being subject to tax. If you haven't already, you can read our guide for a more detailed explanation of the rules for mileage reimbursem*nt.

How the federal mileage rate is set

Each year's mileage rate is based on an examination of the previous year's costs of owning and driving a vehicle in the United States.

According to the IRS, "the standard IRS 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 is based on the variable costs."Learn more about how and when to use the medical and charity rates.

Examples of variable costs include gas, oil changes, parking, tire change, getting a new battery, and other necessary components. Examples of fixed costs are insurance, license, registration fee, and taxes.

What the IRS mileage rate covers

The IRS mileage rate is designed to cover all expenses of owning and running your vehicle, but only for business purposes. Some of these costs include:

• Leasing payments
• Insurance
• Vehicle tax
• Maintenance of your vehicle
• Gas and oil
• Car tyres

Federal mileage rate for 2024

• 67 cents per mile for business miles
• 21 cents per mile for medical and moving purposes
• 14 cents per mile in the service of charitable organizations

The federal mileage rate for 2023

• 65.5 cents per mile for business-related driving
• 22 cents per mile for medical and moving purposes
• 14 cents per mile for charity-related miles

The federal mileage rate for previous years

How to use the IRS mileage rate

Use the IRS mileage rate to receive mileage reimbursem*nt or deductions for the business-use portion of driving your vehicle.

The most common way for companies to reimburse employees for business-related driving is through the federal mileage rate. Each month, you report the business mileage you’ve driven and receive reimbursem*nt equal to the IRS mileage rate for each mile.

As a self-employed individual, you can deduct your business mileage expenses from your annual tax return. Using the mileage rate set by the IRS, calculate the business mileage you’ve driven throughout the year you’re claiming for and multiply by that year’s set government mileage rate.

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