Dec 14, 2023 - Economy

IRS raises 2024 mileage rate despite lower gas prices

IRS logo and sign on wall reads IRS

The Internal Revenue Service is increasing the mileage rate starting Jan. 1. Photo: Al Drago/Bloomberg via Getty Images

Despite falling gas prices, the Internal Revenue Service is increasing the "optional standard mileage rate" used to calculate tax deductions by 1.5 cents a mile for 2024.

Why it matters: Americans are grappling with high car expenses including vehicle prices, rising car insurance and surging car repair costs.

The big picture: The increase goes into effect Jan. 1, 2024, bringing the IRS rate to 67 cents per mile driven for business use, the federal agency announced in a statement Thursday.

  • The rate is 11 cents higher than the 2021 rate.

Context: Taxpayers use the rate to calculate the "deductible costs of operating an automobile for business and certain other purposes" instead of tracking actual costs.

  • It's also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

2024 IRS mileage rate

Details: The following IRS rates apply to electric and hybrid vehicles as well as gasoline and diesel-powered cars...

  • 67 cents per mile driven for business use, up 1.5 cents from 2023.
  • 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a 1-cent decrease from the 2023 rate.
  • 14 cents per mile driven in service of charitable organizations is unchanged and is a rate set by statute, the IRS said.

Mileage tax deductions

Between the lines: The IRS said that "under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses."

  • Taxpayers also have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates, the IRS said.

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