IRS Standard Mileage Rates: What You Need to Know

Did you know that the IRS allows deducting a portion of your mileage from tax return if you’re using your car for purposes other than personal transport? You can qualify for the IRS standard mileage rates if you use your vehicle for charity, business, moving, or medical purposes. However, you cannot simply deduct your commute between home and your job, as there are several conditions you have to meet first.

In this article, we will discuss the current IRS mileage rate and how to calculate its associated deductions.

IRS Standard Mileage Rates for 2025

So, what is an IRS mileage rate for 2025? The standard mileage rate is as follows:

• 67 cents/mile for business use.
• 21 cents/mile for medical or moving (i.e. relocation) purposes. Note that only active-duty members of the military can deduct the use of vehicles for moving.
• 14 cents/mile for charity use.

What you should also know about the IRS mileage rate is that the deduction amounts are adjusted each year. For instance, in 2023, the business use deductions were 65.5 cents/mile, charity users had the same 14 cents/mile, while medical or moving qualified you for 22 cents/mile deduction rate. In 2021, you could deduct 56 cents/mile for your business trips, 14 cents/mile for charity use, and 16 cents/mile for medical use or moving.

Therefore, it is important to check the exact rates for each tax year on the IRS website so you don’t accidentally use the wrong ones, as it will inevitably trigger an audit.

How to Use IRS Rate for Mileage

Now that you know the rates, we should also mention what conditions apply here. For business use, you cannot deduct miles for commuting to and from work. However, you can deduct mileage for business trips and driving to temporary workplaces.

If you claim tax deductions for charity or medical (driving to a doctor, hospital, etc.) purposes, keep in mind that you will need to itemize your deductions on your tax return. This process can be time-consuming and complex.

Under the IRS standard mileage rate rules there are two ways you can claim the deduction  — the standard mileage rate method and the actual expenses method. You can choose between the two, depending on which one will give a more significant tax benefit.

Standard mileage rate method

This method uses the rates we’ve just mentioned, and it is as straightforward as it gets. All you have to do is multiply your number of miles in the corresponding category (business, charity, medical, or moving) by the rate.

For example, let’s say you drove 10,000 miles covering the needs of your business in 2025. This means you’ll need to take 10,000 miles, multiply them by $0.67, and so claim $6,700.

The only downside of this method is that you need to know the exact number of miles you drove.

Actual expenses method

Those who use vehicles for business purposes and don’t want to constantly track their mileage can use the actual expenses method. Your vehicle-related expenses might include:

• Tires;
• Gas;
• Lease payments;
• Auto insurance;
• Repair works;
• Licensing;
• Registration fee;
• Depreciation.

The way it works is that you add up all the expenses, and then multiply the amount by the percentage you allocate to business use.

For instance, if you drive your vehicle for work 50% of the time, half of the expenses are associated with business use. To calculate deductions, you take your total expenses, say $5,500, and multiply them by 50%, so you get $2,750, which you can claim as a business expense.

Benefits and Limitations of IRS Reimbursement Rate Methods

So what about the advantages and disadvantages of these methods?

If you drive a lot, you may get higher deductions with the standard mileage method. The record-keeping part is not even that hard nowadays, as you can simply install a mile-tracking app to do the work for you. Also, you can always switch to the actual expenses method in the future. The downside here is that if you don’t drive all that much, the deductions will be lower.

As for the actual expenses method, it is often more beneficial for individuals who do low to moderate amounts of driving. Another advantage of this method is that it accounts for vehicle depreciation, which can be significant. Also, with this approach, you don’t need to keep track of miles. The main problem here is that if you select this method the first year, you won’t be able to switch to the standard mileage rate method later.

Final Thought

We’ve provided the answer to what is IRS mileage rate and how to calculate your deductions, so you can decide for yourself which method works best in your situation. Both approaches have their pros and cons.

Overall, the standard mileage rate method is better suited for people who drive a lot during the year. The actual expenses method, on the other hand, works better for people who drive moderately. However, we recommend that you make your calculations before choosing a method to see which one will give you a higher deduction.