IRS Gas Mileage Rate: What It Is and How It Affects Your Deductions

The IRS sets a standard mileage rate each year to help taxpayers calculate deductible vehicle expenses. This rate simplifies tax deductions for those using personal vehicles for business, medical, moving, or charitable purposes. Instead of tracking actual costs like gas and maintenance, eligible taxpayers multiply their miles driven by the IRS rate.

Understanding how this rate applies to different categories and the necessary documentation can help maximize tax benefits while ensuring compliance.

Factors Affecting the Rate

The IRS determines the standard mileage rate based on economic conditions and vehicle operating costs. Fuel prices, which fluctuate due to global supply and demand, geopolitical events, and domestic production, are a major factor. When gas prices rise, the IRS often increases the rate; when they drop, the rate may be adjusted downward.

Vehicle depreciation also plays a role, as cars lose value over time. The IRS incorporates depreciation estimates, particularly for business mileage, using data from the automotive industry to reflect long-term wear and tear.

Maintenance and repair costs, including oil changes, tire replacements, and general upkeep, influence the rate as well. These expenses fluctuate based on inflation, labor costs, and supply chain conditions. Insurance premiums and registration fees further contribute to vehicle ownership costs.

Categories for Standard Mileage

The IRS standard mileage rate applies to different types of vehicle use, each with specific rules. Taxpayers must categorize their mileage correctly to claim the appropriate deduction.

Business

Work-related mileage is deductible if the travel is necessary and directly related to business activities. This includes trips to meet clients, attend conferences, or visit job sites but does not cover commuting from home to a regular workplace. Self-employed individuals and business owners can claim this deduction, but employees cannot deduct unreimbursed work mileage due to the Tax Cuts and Jobs Act of 2017.

To calculate the deduction, taxpayers multiply their business miles by the IRS rate for the applicable year. For example, if the rate is 65.5 cents per mile and a freelancer drives 3,000 miles for work, the deduction would be $1,965 (3,000 × 0.655). Businesses may also deduct actual vehicle expenses but cannot switch between methods within the same year for the same vehicle. Keeping detailed records, including dates, destinations, and trip purposes, is necessary in case of an audit.

Medical or Moving

Mileage for medical care is deductible if the travel is primarily for obtaining necessary medical services, such as trips to doctors, hospitals, pharmacies, and therapy sessions. However, the deduction is only available if total medical expenses exceed 7.5% of adjusted gross income (AGI), as outlined in IRS Publication 502. The standard mileage rate for medical travel is typically lower than the business rate.

Moving-related mileage is deductible only for active-duty military members relocating due to a permanent change of station. This restriction was introduced by the Tax Cuts and Jobs Act, which eliminated the moving expense deduction for most taxpayers. Qualifying service members can deduct mileage for transporting themselves and their household goods to a new duty station. The rate for moving mileage matches the medical mileage rate, and taxpayers must meet distance and time tests to claim the deduction.

Charitable

Mileage driven for volunteer work with qualified nonprofit organizations is deductible at a fixed rate set by Congress. This rate is significantly lower than the business and medical rates, as it is not based on actual vehicle costs. Eligible travel includes transporting supplies, driving to volunteer events, or providing transportation for charitable purposes.

Unlike business and medical mileage, charitable mileage deductions are only available to taxpayers who itemize deductions. The IRS requires that the organization benefiting from the travel be a registered 501(c)(3) nonprofit. Taxpayers must maintain records of trip dates, destinations, and purposes, as well as any reimbursements received. If a volunteer receives reimbursement exceeding the IRS rate, the excess amount may be considered taxable income.

Documentation You May Need

Maintaining thorough records is necessary to substantiate mileage deductions and comply with IRS requirements. While the standard mileage rate simplifies expense calculations, taxpayers must still provide proof that the mileage claimed is accurate.

A well-organized mileage log is the best way to document trips. The IRS does not mandate a specific format, but the log should include the date of each trip, starting and ending locations, miles driven, and the purpose of the travel. Digital mileage-tracking apps, such as MileIQ or Everlance, can automate this process using GPS tracking. Taxpayers who prefer manual logs should update their records consistently to avoid gaps or inaccuracies.

Supporting documents can further validate deductions. Receipts for tolls, parking fees, and other travel-related expenses should be retained, as these costs may be deductible in addition to mileage. Calendar entries, client invoices, or appointment confirmations can serve as additional evidence that the travel was necessary. While the IRS does not require odometer readings for each trip, recording the vehicle’s mileage at the beginning and end of the year can help verify total miles driven.

Key Differences in Reimbursement and Tax Deductions

Employers reimbursing employees for work-related mileage follow different rules than those claiming deductions on tax returns. Businesses can reimburse employees using the standard mileage rate, but this is not a tax deduction for the employee. Instead, it is considered a non-taxable reimbursement when structured under an accountable plan, meaning employees must document their mileage and return any excess payments. If an employer provides a flat car allowance instead of reimbursing actual mileage, the allowance is treated as taxable income unless substantiated with detailed records.

For self-employed individuals and business owners, mileage deductions are reported on Schedule C, reducing taxable income rather than being directly reimbursed. This distinction affects tax liability since deductions lower adjusted gross income (AGI), potentially influencing eligibility for other tax benefits such as the Qualified Business Income (QBI) deduction under Section 199A. Unlike reimbursements, which provide immediate cost recovery, deductions only yield a benefit when they exceed the standard deduction or contribute to a lower tax bracket.