What Is the Tax Rate Per Mile for Mileage Deductions?

Tracking mileage for tax purposes can help reduce taxable income, but the rate per mile varies depending on the trip’s purpose. The IRS sets a standard mileage rate each year to simplify deductions for business, medical, and charitable travel expenses.

Understanding how this rate is determined and applied ensures taxpayers maximize their deductions while staying compliant with reporting requirements.

Purpose of the Mileage Deduction

The mileage deduction accounts for the costs of using a personal vehicle for tax-deductible purposes. Since vehicles depreciate and require fuel, maintenance, and insurance, the IRS allows taxpayers to deduct a portion of these expenses when the vehicle is used for qualifying activities.

For self-employed individuals and small business owners, this deduction lowers taxable income by covering business-related vehicle expenses. Instead of tracking every fuel purchase or repair, taxpayers can apply a standard mileage rate, simplifying recordkeeping. This is especially useful for professionals who frequently travel for work, such as real estate agents, consultants, and independent contractors.

Employees who are not reimbursed for work-related travel may also benefit, though the Tax Cuts and Jobs Act (TCJA) of 2017 temporarily eliminated this deduction for most workers through 2025. However, self-employed individuals and business owners can still claim it, making it an important tax-saving tool.

How to Calculate Deductions with the Mileage Rate

To determine the deductible amount, multiply the total business, medical, or charitable miles driven by the applicable IRS mileage rate. For 2024, the IRS set the business mileage rate at 67 cents per mile, the medical and moving rate at 21 cents per mile, and the charitable rate at 14 cents per mile. These rates change annually based on vehicle operating costs.

Accurate recordkeeping is required. The IRS mandates a log that includes the date of each trip, starting and ending locations, purpose of travel, and total miles driven. Apps like MileIQ, Everlance, and TripLog can automate tracking, reducing errors and ensuring compliance. Keeping records as trips occur helps avoid disputes in case of an audit.

Some taxpayers may benefit more from the actual expense method, which deducts fuel, insurance, and depreciation based on the percentage of miles driven for a qualifying purpose. However, once the standard mileage rate is used for a vehicle in the first year, switching to actual expenses later is restricted.

Factors Influencing the Standard Rate

The IRS sets the mileage rate based on vehicle operating costs, economic trends, and policy considerations. The goal is to approximate the costs of using a vehicle for deductible purposes without requiring taxpayers to track every expense.

Operational Costs

The rate reflects expenses such as fuel, maintenance, repairs, insurance, registration fees, and depreciation. The IRS reviews data from the American Automobile Association (AAA) and other industry sources to estimate these costs.

Fuel prices are a major factor. When gas prices surged in mid-2022, the IRS made a rare mid-year adjustment, increasing the business mileage rate from 58.5 cents per mile to 62.5 cents per mile for the second half of the year. Depreciation also plays a role, as vehicles lose value over time. Supply chain disruptions and changes in resale values affect how quickly cars depreciate. Maintenance costs, including oil changes and tire replacements, further influence the rate.

Market Conditions

Economic trends, such as inflation and interest rates, affect vehicle ownership costs. Rising car prices and increased repair costs due to supply chain constraints influence the mileage rate. The Federal Reserve’s interest rate policies also impact vehicle financing costs.

Labor shortages in the auto repair industry can drive up maintenance expenses, which the IRS factors into its calculations. The used car market is another consideration—when demand for used vehicles is high, depreciation rates may slow, affecting the overall cost structure of vehicle ownership.

Policy Considerations

Legislative and regulatory factors also influence the mileage rate. The TCJA temporarily eliminated the deduction for unreimbursed employee mileage, changing how the IRS assesses the impact of the standard mileage rate.

Environmental policies promoting fuel efficiency and electric vehicles may affect long-term trends in vehicle costs. The charitable mileage rate, set by Congress at 14 cents per mile in 1998, has remained unchanged because it is fixed by statute rather than adjusted annually like business and medical rates.

Types of Trips That May Be Eligible

The IRS allows mileage deductions for business, medical, and charitable travel, each with specific rules. Proper documentation is necessary to claim these deductions correctly.

Business-Related

Business mileage is deductible if the travel is ordinary and necessary under Section 162 of the Internal Revenue Code. This includes trips between work locations, client meetings, and temporary job sites. However, commuting from home to a regular workplace is not deductible, as established in Fogg v. Commissioner, 89 T.C. 310 (1987).

For example, if a self-employed consultant drives 200 miles per month for client visits, the deduction at the 2024 rate of 67 cents per mile would be $134 per month or $1,608 annually. If audited, the taxpayer must provide a mileage log and appointment records to substantiate the claim. Businesses that reimburse employees for mileage must follow an accountable plan under Treasury Regulation 1.62-2 to ensure reimbursements are not treated as taxable income.

Medical

Medical mileage is deductible under IRC Section 213 if the travel is primarily for and essential to medical care, such as trips to doctors, hospitals, and pharmacies. The 2024 rate is 21 cents per mile, and deductions are subject to the 7.5% adjusted gross income (AGI) threshold. Only expenses exceeding this percentage of AGI are deductible.

For example, a taxpayer with an AGI of $50,000 must have total medical expenses exceeding $3,750 before any deductions apply. If they drive 1,000 miles for medical appointments, the deduction would be $210. However, if total medical expenses, including mileage, do not surpass the threshold, no deduction is allowed. Taxpayers should keep appointment confirmations and pharmacy receipts to document medical necessity.

Charitable

Mileage driven for charitable purposes is deductible under IRC Section 170 if the travel is directly related to volunteer work for a qualified 501(c)(3) organization. The rate is 14 cents per mile and has remained unchanged since 1998.

For example, if a volunteer drives 500 miles in a year to deliver meals for a nonprofit, the deduction would be $70. While this amount may seem small, it can be combined with other charitable contributions. Taxpayers must maintain records showing the date, purpose, and miles driven. If reimbursed by the organization, the mileage cannot be deducted unless the taxpayer voluntarily declines reimbursement and documents the waiver.

Reporting Requirements for Individuals

Claiming a mileage deduction requires proper documentation. The IRS mandates detailed records, as mileage deductions are frequently scrutinized during audits. Inadequate documentation can result in denied deductions or penalties.

Self-employed individuals report business mileage on Schedule C (Form 1040), while businesses deduct mileage on corporate tax returns. Medical and charitable mileage deductions are itemized on Schedule A (Form 1040) and only apply if total itemized deductions exceed the standard deduction. The IRS may request a mileage log, which should include the date, purpose, and distance of each trip. Digital tracking apps or spreadsheets help ensure compliance with IRS Publication 463, which outlines substantiation requirements for vehicle expenses.

Difference Between Reimbursement and Deductions

Mileage deductions and reimbursements serve different purposes. Deductions reduce taxable income, while reimbursements compensate individuals for vehicle-related expenses without affecting tax liability.

Employers that reimburse employees for mileage typically follow the IRS standard mileage rate to ensure payments remain tax-free under an accountable plan. If an employer reimburses more than the IRS rate, the excess is taxable income and must be reported on the employee’s W-2.

Self-employed individuals do not receive reimbursements but can deduct mileage expenses on their tax returns. If an individual is reimbursed for mileage and also claims a deduction, they must reduce their deductible amount by the reimbursement received to prevent double-dipping.