2024 Business Mileage Rate: All You Need to Know

The Internal Revenue Service (IRS) has announced the 2024 business mileage rate, which is the amount you can deduct for each mile you drive your car for business purposes. The standard mileage rate for 2024 is 65.5 cents per mile, up from 62.5 cents per mile in 2023.

In addition to the standard mileage rate, there are two other methods you can use to deduct your business mileage expenses: the actual expense method and the fixed and variable rate method.

The actual expense method allows you to deduct all of your actual car expenses, including gas, oil, repairs, maintenance, insurance, depreciation, and lease payments.

The fixed and variable rate method allows you to deduct a fixed amount for each mile you drive, plus a variable amount for certain expenses, such as gas and oil.

The IRS also provides a special mileage rate for electric vehicles, which is 60.5 cents per mile in 2024.

Which Method Should You Use?

The best way to calculate your business mileage deductions depends on your individual circumstances. If you have a lot of car expenses, the actual expense method may be the best option for you. If you have a newer car, the fixed and variable rate method may be a better choice.

You can use the IRS Mileage Rate Calculator to estimate your business mileage deductions using any of the three methods.

Common Mistakes to Avoid

There are a few common mistakes that people make when claiming business mileage deductions. These mistakes can lead to your deductions being disallowed or reduced.

• Not keeping a mileage log. The IRS requires you to keep a contemporaneous mileage log in order to claim business mileage deductions. Your mileage log should include the date, time, starting and ending odometer readings, destination, and purpose of each business trip.
• Mixing personal and business miles. If you use your car for both personal and business purposes, you need to be careful to only claim business miles on your tax return.
• Claiming more miles than you actually drove. The IRS has a strict policy against overstating your business mileage deductions. If you are caught claiming more miles than you actually drove, your deductions may be disallowed or reduced.
• Not substantiating your deductions. The IRS may ask you to provide documentation to support your business mileage deductions. This documentation can include your mileage log, receipts for gas and oil, and a statement from your employer.

How to Claim Your Mileage Deductions

To claim your business mileage deductions, you will need to complete Form 2106, Employee Business Expenses, and attach it to your tax return. On Form 2106, you will need to provide information about your business trips, including the date, time, starting and ending odometer readings, destination, and purpose of each trip.

If you use the standard mileage rate, you will also need to provide the total number of business miles you drove during the year. If you use the actual expense method or the fixed and variable rate method, you will need to provide a detailed list of your car expenses.

The IRS has a number of resources available to help you understand the rules for claiming business mileage deductions.

• Publication 463, Travel, Entertainment, Gift, and Car Expenses
• Mileage Rate Calculator

You can also find more information on the IRS website.

Table 1: 2024 Business Mileage Rates

Table 2: Pros and Cons of Each Mileage Deduction Method

Table 3: Common Mileage Deduction Errors

Table 4: IRS Mileage Rate Resources

Conclusion

The 2024 business mileage rate is 65.5 cents per mile. You can use this rate to deduct your business mileage expenses using the standard mileage rate method. Alternatively, you can use the actual expense method or the fixed and variable rate method. The best method for you depends on your individual circumstances.