Publication date: January 30, 2024
Reading time: 5 minutes
Tax season is an important time of year for individuals and businesses alike. Each tax season, various changes and updates to tax laws and regulations impact the amount of money that you owe or are owed as a refund. In 2024, one such update is the new mileage rates in the United States (US). Whether you are a self-employed individual, a small business owner, or simply curious about how your driving habits might affect your taxes, this article breaks down what you need to know about the new mileage rates for 2024.
NOTE: This article discusses mileage rates as related to US taxes only. Other countries also have their accepted mileage rate deduction amounts. eRank is not a legal or tax official. This article is meant for informational purposes only. It is always best to check with your tax representative for specific questions and advice.
The IRS Mileage Rate
The Internal Revenue Service (IRS) annually sets the standard mileage rates used by US citizens—including Etsy and other handmade sellers—for tax purposes. These rates are designed to account for the cost of operating an automobile for business, charitable, medical, or moving purposes. The mileage rates help individuals and businesses calculate deductible expenses related to the use of their vehicles.
Business Mileage Rate
If you are self-employed or own a business and use your vehicle for business purposes—such as traveling to meet clients, attending conferences, or making deliveries, you can typically deduct your mileage expenses from your taxable income. For 2024, the standard business mileage rate is 67 cents per mile, which is an increase from the 2023 rate of 65.5 cents per mile.
This means that for every mile you drive for business-related activities, you can potentially deduct 67 cents from your taxable income. To qualify for this deduction, it is essential to maintain accurate records of your business-related trips, including dates, mileage, and the purpose of each trip.
If you are an employee, your employer may reimburse you for your business travel by using the standard mileage rate. However, at this time, if your employer does not reimburse you, you cannot deduct any unreimbursed travel expenses on your annual tax return.
Medical Mileage Rate
For individuals who incur medical expenses while driving to receive necessary medical care, the medical mileage rate is crucial. In 2024, the medical mileage rate is set at 21 cents per mile, which is a decrease from the 22 cents per mile rate in 2023. To deduct for medical mileage, you must itemize on your tax return for that year and keep in mind that you can only deduct medical expenses that exceed 7.5% of your adjusted gross income. In addition, it is vital to keep accurate records of your medical appointments and the mileage incurred for each appointment.
Moving Mileage Rate
In 2024, the moving mileage rate is also set at 21 cents per mile, down from the 22 cents per mile in 2023. At this time, this deduction is only available to members of the US Armed Forces on active duty who relocate, pursuant to a military order, to a permanent change of station. It is not available to other taxpayers who relocate due to a change of job location. However, sometimes employers may reimburse employees who relocate for their employment, and they typically use the IRS mileage rate to calculate this reimbursement.
Charitable Mileage Rate
For those who volunteer their time and vehicle for charitable organizations, the mileage rate for charitable purposes remains unchanged in 2024 at 14 cents per mile. This rate applies when you use your vehicle to provide services to a qualified charitable organization, if you itemize deductions on your annual tax return. Your charitable deduction may be limited, however, to a certain percentage, depending on the type of charity. Remember to keep detailed records, including the name of the organization and the purpose of your trip.
Important Considerations
If you plan to deduct mileage for 2024 or are even considering it as a possibility, it is best to keep track of your mileage from the very beginning. In addition, below are some other important considerations to keep in mind.
Documentation is Key
Regardless of whether you’re deducting business, medical, moving, or charitable mileage, maintaining thorough and accurate records is crucial. The IRS may request documentation to support your deductions in case of an audit. However, the IRS does not specify how the mileage tracking must be done. You can use an app on your phone, a spreadsheet on your computer, a mileage logbook, or even basic pen and paper. The only requirement is that you do keep detailed records.
Self-employed Individuals
If you’re self-employed, your vehicle expenses, including mileage, are a deductible business expense. If your vehicle is used for both personal and business trips, be sure to differentiate the mileage between the two categories accurately.
State Taxes
State tax laws may also affect your mileage deductions; therefore, it is essential to understand how federal and state regulations interact. Likewise, not all states allow mileage deductions on your state tax return.
Take Advantage of the Deduction
Whether you’re a small business owner such as an Etsy seller who is looking to maximize deductions or an individual with medical or charity-related expenses, understanding and knowing the 2024 IRS mileage rates is essential for accurate tax preparation.
Remember to maintain meticulous records of your mileage and consult a tax professional if you have questions or need guidance on how to make the most of these deductions. By staying informed and organized, you can ensure that you are taking advantage of the mileage deductions available to you while remaining compliant with IRS regulations.
You can find additional information about the 2024 mileage rates on the IRS’s website.
NOTE: This article discusses mileage rates as related to US taxes only. Other countries also have their accepted mileage rate deduction amounts. eRank is not a legal or tax official. This article is meant for informational purposes only. It is always best to check with your tax representative for specific questions and advice.