IRS Increases Business Mileage Rate for 2024

The Internal Revenue Service has increased the vehicle mileage rate for 2024 when using a personal vehicle for business purposes. The rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

Beginning January 1, 2024, the new 2024 mileage rates will be:

• 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 decrease of 1 cent from 2023.
• 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.

The new rates apply to gasoline and diesel vehicles as well as electric and hybrid vehicles.

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.

The IRS last increased the mileage rate in 2023 by 3 cents per mile. The reimbursement rate has increased by 17% since 2020, going from 57.5 cents per mile in 2020 to 67 cents starting in 2024. The reimbursement rate actually went down between 2019 and 2021, going from 58 cents down to 56 cents.

Gasoline Price Trends

The price of gasoline is a big factor in the cost of operating a motor vehicle.

From 2015-2020, the average price of gas held fairly steady. However, the price rose sharply starting in 2021. This was a significant factor in the increase in the IRS mileage reimbursement rates.

The average price for a gallon of gas was $2.26 in 2020. In 2021, it rose to $3.094, a 37% increase. In 2022, it rose higher still to $4.064, a 31% increase over the previous year and an 80% increase over 2020. However, so far in 2023, the average price has retreated somewhat to $3.668.