12.22.2023

IRS announces business standard mileage rate increases for 2024

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The Internal Revenue Service allows qualified taxpayers to deduct vehicle mileage related to business, charity, medical or moving expenses – but there are several rules to be aware of. Recently issued Notice 2024-08 outlines the optional 2024 standard mileage rates that taxpayers will need to use when computing the deductible costs in the upcoming year.

Beginning January 1st, 2024, the standard mileage rates for the use of a car (as well as vans, pickups or panel trucks) will be as follows:

  • 67 cents per mile driven for business purposes (up 1.5 cents from 2023).
  • 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the armed forces (down 1 cent from 2023).
  • 14 cents per mile driven in service of charitable organizations (the rate is set by statute and currently remains fixed).

Notably, these rates apply as well to electric/hybrid-electric, gas and diesel-fueled vehicles.

Furthermore, this guidance outlines the maximum standard automobile cost under a fixed-and-variable-rate (FAVR) plan of $62,000 for automobiles including trucks and vans, (up $1,200 from 2023). Under a FAVR plan, a standard amount is deemed substantiated for an employer’s reimbursement to employees for expenses they incur in driving their vehicle in performing services as an employee for the employer. For purposes of the fleet-average valuation rule in Regs. Sec. 1.61-21(d)(5)(v) and the vehicle cents-per-mile rule under Regs. Sec. 1.61-21(e), $62,000 is also the maximum fair market value of automobiles including trucks and vans, first made available in calendar year 2024. The portion of the business standard mileage rate that is treated as depreciation for purposes of calculating reductions to basis will be 30 cents per mile (up 2 cents from 2023).

There are some provisions in place to be aware of, following the Tax Cuts and Jobs Act tax reform changes in 2017, that prohibit taxpayers from claiming a miscellaneous itemized deduction for unreimbursed employee travel expenses. Additionally, taxpayers are unable to claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station.

As an alternate option, taxpayers can calculate the actual costs of using their vehicle rather than using the standard mileage rates if the rates don’t adequately reflect costs associated. Although it is considered the road less traveled, it is still a viable option by deducting actual expenses rather than using the standard mileage rates provided. It is imperative to maintain clear record keeping in the event an audit is to arise to accurately substantiate the costs that are being claimed.

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