IRS Mileage Rate Trend

The IRS standard mileage rate is an essential factor for anyone who drives for work or manages people that do. If you’re self-employed, deducting vehicle expenses on your taxes can add up to a lot, especially gig workers and rideshare drivers. For employees and their employers, the IRS mileage rate is an important benchmark for setting reimbursement rates.

But how does the IRS determine mileage rates each year, and what can we expect for the 2024 mileage rate?

This guide explains everything you need to know about past, present and future IRS mileage rates. We'll cover:

  • How the IRS calculates standard mileage rates annually
  • Historical mileage rates over the past decade
  • Projections and early predictions for the 2024 IRS mileage deduction
  • Key factors that influence any rate increases or decreases
  • How to use the standard mileage rate

Follow along for deep insights into IRS mileage rates over time and what may be in store for 2024.

How Does the IRS Determine Mileage Rates Each Year?

The IRS publishes standard mileage rates each calendar year that set the per-mile rate for operating vehicles for business, medical, or charitable purposes. 

The rate for business represents an estimate of the per-mile costs of using your car, based on nationwide averages in the previous year. To set the business rate, the IRS analyzes these primary data sources:

  • Transportation cost inflation metrics and overall consumer spending on vehicles
  • National average gas prices from the previous year
  • Vehicle insurance premium trends and pricing data
  • Maintenance and tire costs benchmarked across industry data
  • Broader transportation industry analyses assessing vehicle ownership costs

In particular, gas prices are heavily weighted in the yearly calculation since fuel is a major cost factor directly tied to mileage. The IRS synthesizes these data points to determine a reasonable standard per-mile rate.

What is the current IRS Mileage Rate?

The rates for 2023 were set in late December of last year as the following:

  • 65.5 cents per mile for business purposes
  • 22 cents per mile for medical purposes
  • 14 cents per mile for charitable purposes

The mileage rate for medical use is typically slightly lower than business use because they take fewer costs into account. Variable costs, such as gas, are included in the calculation, but not fixed costs that don’t change much based on how many miles you drive, like insurance.

The rate for charitable use is set by statute. Currently set at 14 cents per mile, it has not changed in many years.

IRS Mileage Rate History Over the Past Decade

IRS Mileage rate and gas price history

Looking back over the last decade of IRS standard mileage rates provides helpful context on what drivers can expect in 2024 based on inflation, fuel prices, and other cost factors:

IRS Mileage Rates 2014-2023

  • 2014 - 56 cents per mile
  • 2015 - 57.5 cents per mile
  • 2016 - 54 cents per mile
  • 2017 - 53.5 cents per mile
  • 2018 - 54.5 cents per mile
  • 2019 - 58 cents per mile
  • 2020 - 57.5 cents per mile
  • 2021 - 56 cents per mile
  • 2022* - 58.5 cents/62.5 cents per mile
  • 2023 - 65.5 cents per mile
  • 2024 - 66-68 cents per mile (est.)

*In 2022, the IRS mileage rate was raised from 58.5 cents to 62.5 cents for the second half of the year, to combat rising costs.

Rates trended lower between 2016 and 2018 due to low national gas prices and modest inflation. However, in recent years, the rate has gone up due to a reverse in those same factors. Higher rates better reflect the true costs that drivers are incurring for business transportation when gas and overall consumer prices are elevated.

Early Projections - What To Expect for the 2024 IRS Mileage Rate

The IRS won't officially publish the 2024 standard mileage rates until late 2023(Last year, this was published December 29th). However, based on current economic indicators, industry experts project a modest rate increase:

  • If national average gas prices remain fairly stable in 2023, expect a 2024 rate between 66-68 cents per mile.
  • Significant gas price fluctuations in either direction or high transportation cost inflation could push the number a few cents higher or lower.
  • Absent major unforeseen economic changes, the 2024 IRS mileage rate will likely land close to the 2023 level.
  • Past trends show the IRS prefers incremental rate changes year-over-year rather than drastic swings up or down.

The actual 2024 mileage rate won't be confirmed until its formal announcement in late 2023, historically coming in late December. But early forecasts suggest we can anticipate a figure comparable to 2023, with the possibility of a small 1-3 cent increase.

Of course, unexpected changes in gas prices, inflation, or other economic factors could alter projections. The IRS accounts for prevailing conditions as it finalizes 2024 rates.

Key Factors That Influence IRS Mileage Rate Changes

Though based on thorough data analysis, IRS mileage rates are inherently estimates. Many variables influence transportation costs annually. Key factors that can impact rate changes include:

  • Gas Prices - As the major cost tied directly to mileage, fuel price fluctuations significantly sway annual rates. Unexpected gas price spikes or plunges alter projections.
  • Vehicle Maintenance - Rises in parts, labor and tire costs lead to rate increases to cover the gap. Improvements become headwinds.
  • Insurance Premiums - Vehicle and commercial rideshare insurance pricing trends factor into the mileage deduction.
  • Inflation - High transportation cost inflation boosts rates. Low inflation contributes to slower rate of growth.
  • Used Car Prices - Stronger used prices lead to higher depreciation costs factored in. Weaker prices have the opposite effect.
  • Tax Policy - Tax code changes around business mileage could influence yearly rate decisions.
  • Industry Factors - Wider economic or industry issues affecting personal transportation costs impact the annual analysis.

The IRS considers these variables when setting each year's mileage deduction rate. For 2024, inflation and gas prices will have the biggest influence, barring wider economic impacts.

How To Use The Standard Mileage Rate

When it’s published, the 2024 mileage rate will apply to all driving done starting January 1, 2024. It will be the rate at which self-employed folks can deduct business mileage from their 2024 taxes and the rate up to which companies can reimburse employees tax-free.

Regardless of small annual fluctuations, the IRS mileage rate remains significant, especially for people who drive a lot, like for gig workers, rideshare drivers, and sales reps. Say, for example, the 2024 standard mileage rate is set at 67 cents per mile. Just 1,000 miles of driving would equate to $670!

As a result, accurately capturing mileage and maintaining an IRS-compliant mileage log can make a big difference in your bottom line.

An image showing the IRS Mileage Log Requirements: Mileage, Date, Destination, and Purpose

To maximize the opportunity:

  • Track Methodically - Document every business mile driven throughout the year. An automatic mileage tracker app like Everlance helps make this easy.
  • Collect Supporting Records - Keep thorough logs and data to validate business use in case of an audit.
  • Organize Diligently - Carefully categorize business vs. personal miles and expenses.
  • Account Frequently - Don’t let months slip by before you review and total up your amounts

We also recommend consulting a tax pro to help ensure you’re taking advantage of the IRS standard mileage rate optimally.

When the 2024 mileage rate is published by the IRS, we’ll update this article. Then as we flip our calendars to the new year, be sure to leverage the 2024 IRS mileage rate by properly applying it to your mileage records.

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