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IRS Issues Standard Mileage Rates for 2024

(Parker Tax Publishing January 2024)

The IRS issued the 2024 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. The IRS also issued the amount taxpayers must use in calculating reductions to a vehicle's basis for depreciation taken under the business standard mileage rate, as well as the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate plan. Notice 2024-8.

Beginning on January 1, 2024, Notice 2024-8 provides that the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

(1) 67 cents per mile driven for business use (up from 65.5 cents per mile for 2023);

(2) 21 cents per mile driven for medical or moving purposes (down from 22 cents per mile for 2023); and

(3) 14 cents per mile driven in service of charitable organizations.

The IRS issued the standard mileage rates for 2023 in Notice 2023-3. For 2024, the business mileage rate is increased 1.5 cents per mile over the rate for 2023. The rate for medical and certain moving expenses is decreased one cent from 2023. The charitable rate is set by statute and remains unchanged.

Observation: It is important to note that under the Tax Cuts and Jobs Act of 2017, individuals cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Generally, individuals also cannot claim a deduction for moving expenses. However, there is an exception to this rule for members of the Armed Forces on active duty who are moving under orders to a permanent change of station.

The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs. Taxpayers who are eligible to use the standard mileage rate have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Code Sec. 179 deduction for that vehicle. In addition, the business standard mileage rate is not available for five or more vehicles used simultaneously. These and other limitations are described in Section 4.05 of Rev. Proc. 2019-46.

Notice 2024-8 also contains the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate (FAVR) plan. For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 27 cents per mile for 2020, 26 cents per mile for 2021, 26 cents per mile for 2022, 28 cents per mile for 2023, and 30 cents per mile for 2024.

Finally, for purposes of computing the allowance under a FAVR plan, Notice 2023-3 provides that the standard automobile cost may not exceed $62,000 for automobiles (including trucks and vans).

For a discussion of the rules relating to the use of the standard mileage rate, see Parker Tax ¶91,110. For a discussion of transportation costs relating to medical care, see Parker Tax ¶82,535. For a discussion of mileage rates relating to charitable work, see Parker Tax ¶84,125.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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