The IRS has increased the optional standard mileage rate for automobiles driven for business to 70 cents per mile for 2025. The mileage rates for vehicles used for other purposes will remain unchanged from 2024.

Optional standard milage rates are used to calculate the deductible costs of operating vehicles for business, charitable and medical purposes, as well as for active-duty members of the Armed Forces who are moving.

Beginning Jan. 1, 2025, the standard mileage rates for the use of a car, van, pickup or panel truck are as follows:

• Business use: 70 cents per mile, up 3 cents from 2024.
• Medical or moving purposes for qualified active-duty members of the Armed Forces: 21 cents per mile, the same as in 2024.
• Service of charitable organizations: 14 cents per mile, unchanged from 2024.

The rates apply to fully-electric and hybrid automobiles, as well as gasoline and diesel-powered vehicles. 

Keep in mind, under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. And only taxpayers who are members of the military on active duty may claim a deduction for moving expenses incurred while relocating under orders to a permanent change of station.

Taxpayers have the flexibility to choose between using these standard rates or calculating the actual costs of vehicle usage. If the standard mileage rate is chosen, it must be applied in the first year the vehicle is used for business purposes. Subsequently, taxpayers can decide whether to continue using the standard rate or switch to actual expenses. For leased vehicles, if the standard rate is chosen, it must be used for the entire lease duration, including renewals.

If you have questions about the deductibility of your vehicle’s mileage in 2025, Doeren Mayhew’s business tax pros are here to show you the way.