We are pleased to inform you of the latest update from the Internal Revenue Service regarding the standard mileage rates for 2024. The IRS has announced an increase in the optional standard mileage rate for business use of a vehicle.
Key Highlights:
Business Mileage Rate: The rate for business miles driven has increased to 67 cents per mile, up by 1.5 cents from the 2023 rate.
Effective Date: This new rate is effective from January 1, 2024, as per IRS Notice 2024-08.
Medical or Moving Purposes: For qualified active-duty members of the armed forces, the rate for miles driven for medical or moving purposes is now 21 cents per mile, which is a slight decrease of 1 cent from the previous year.
Charitable Service Mileage Rate: The rate for miles driven in service of charitable organizations remains unchanged at 14 cents per mile, as set by statute.
Depreciation Component: The portion of the business mileage rate considered depreciation for basis reduction purposes is 30 cents per mile for 2024.
Actual Costs vs. Standard Mileage Rates: Taxpayers retain the option to calculate the actual costs of using their vehicle rather than using the standard mileage rates.
FAVR Plan Maximum Cost: The maximum standard automobile cost for a fixed-and-variable-rate (FAVR) plan is now $62,000 for automobiles, which is an increase of $1,200 from 2023.
Fleet-Average and Cents-Per-Mile Valuation Rules: The same $62,000 maximum fair market value applies for the fleet-average valuation rule and the vehicle cents-per-mile rule for automobiles first made available in 2024.
What This Means for You:
The increase in the standard mileage rate for business use reflects changes in the cost of operating a vehicle. If you use your vehicle for business, medical, moving, or charitable purposes, these updated rates will be relevant for calculating your deductible expenses.
Next Steps:
Review Your Mileage Logs: Ensure that your mileage logs for 2024 are accurate and up-to-date to take advantage of the new rates.
Consider Your Options: Decide whether to use the standard mileage rate or to calculate the actual costs of using your vehicle for business purposes.
Plan for Reimbursements: If you receive reimbursements from an employer under a FAVR plan, be aware of the updated maximum automobile cost.
Have a question about your situation?
Our team can review your records and explain your options.
Schedule a ConsultationThis article is for general information only and is not tax or legal advice for your specific situation.