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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:
Follow along for deep insights into IRS mileage rates over time and what may be in store for 2024.
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:
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.
The rates for 2023 were set in late December of last year as the following:
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.
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
*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.
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:
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.
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:
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.
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.
To maximize the opportunity:
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.
Brad Thibeau is the Head of Platform Partnerships at Everlance, focusing on helping self employed people save time and money on their taxes. Previous to Everlance, Brad spent his career at the cross section of tech and finance with key roles at companies like Drizly, CarGurus, and Morgan Stanley. Brad holds a bachelor's degree in Financial Management from Husson University.
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