IRS Issues Standard Mileage Rates for 2025

The IRS has announced the 2025 optional standard mileage rates for calculating deductible costs when operating a vehicle for business, charitable, medical, or moving purposes. Applicable to various vehicles, including electric, hybrid-electric, gasoline, and diesel-powered models, these updated rates take effect on January 1, 2025:

• 70 cents per mile for business use, an increase of 3 cents from 2024.
• 21 cents per mile for medical purposes or relocation for qualified active-duty Armed Forces members. This rate is unchanged from 2024.
• 14 cents per mile for service to charitable organizations, a rate statutorily set and remains unchanged from 2024.

Under the Tax Cuts and Jobs Act, most taxpayers cannot claim deductions for unreimbursed employee travel expenses, and moving expense deductions remain limited to active-duty Armed Forces members moving under official orders.

Taxpayers may use the standard mileage rate for vehicle expenses when eligible. This method must generally be chosen in the first year the car is used for business purposes. In subsequent years, taxpayers can opt between the standard mileage rate and actual expense calculations. For leased vehicles, if the standard mileage rate is chosen, it must be consistently used throughout the entire lease term, including any extensions or renewals.

For more detailed information, refer to IRS Notice 2025-05, which outlines the 2025 standard mileage rates and provides details on maximum automobile costs for various tax purposes. If you have questions about how these updates may affect your tax situation or need guidance on the most beneficial approach for your vehicle expenses, contact your CRI advisor. We’re here to help you make informed financial decisions every step of the way.