Taxes are a part of life, but savvy taxpayers know there’s no need to miss out on potential savings. Understanding and utilizing eligible deductions, like the IRS mileage rate, can help you keep more money in your pocket. In this article, we’ll delve into the nuances of the IRS mileage rate, discuss how you can use it to your advantage for deductions, and guide you on a compliant path for tracking expenses.
Understanding the IRS Mileage Rate
The IRS mileage rate serves as a handy tool for anyone using their personal vehicle for business purposes. Whether you’re off to a client meeting, making deliveries, or visiting job sites, this rate offers a straightforward way to lower your taxable income. You can opt for a per-mile rate instead of keeping tabs on every single expense like fuel, maintenance, and insurance. This method, known as the IRS mileage rate, simplifies things by rolling all vehicle costs into a single figure, potentially boosting your savings while avoiding the tedious task of itemizing.
2025 IRS Mileage Rates: What’s on the Table?
Come 2025, you can deduct 70 cents for every business mile you drive, provided you do so correctly. This 3-cent increase from 2024—from 67 cents to 70 cents—keeps pace with the rising costs of vehicles and inflation, making the deduction even more worthwhile for those who drive for work.
Keep these key mileage rates in mind:
- Business mileage (70 cents per mile): The standard rate for most entrepreneurs and self-employed folks.
- Charitable service mileage (14 cents per mile): Utilized when volunteering with IRS-recognized charities.
- Medical and moving mileage (21 cents per mile): Applicable only for active-duty military moving to a new duty station.
Why Different Rates Exist
The business rate is notably higher because it encompasses all vehicle-related expenses—everything from depreciation to gas. The charitable rate, on the other hand, hasn’t budged since 1998, as it’s legally fixed and not adjusted for inflation.
Who’s Eligible for These Valuable Deductions?
Before you start tallying miles for that 70-cents-per-mile deduction, it’s crucial to understand that eligibility isn’t universal. The Tax Cuts and Jobs Act (TCJA) of 2017 changed the landscape significantly.
For employees using a personal vehicle for work, the days of writing off unreimbursed business expenses are over, save for a few military exceptions. Here’s a closer look at those who actually qualify:
- Self-employed entrepreneurs: Those running their own businesses can deduct mileage for client visits, supply runs, and more.
- Independent contractors: From consultants to designers, any business-related driving is deductible.
- Small business owners: Whether it’s a main gig or a side hustle, mileage for business errands is deductible.
- Gig workers: Drivers for services like Uber or DoorDash can deduct miles driven on the job.
- Freelancers: Writers, photographers, and other freelancers can deduct miles for client meetings, research, and work errands.
Clarifying Business Mileage
Meeting a client from your office? Qualifies. Heading to the bank for a business deposit? Yep. But the daily commute from home to work does not count. For those with a legitimate home office, trips to meet clients or suppliers start accruing business miles the moment you back out of the driveway.
One thing to remember: unless you have a separate, exclusive vehicle for business, you can’t claim 100% of your car use. Dual-use vehicles require you to track and calculate the business-use percentage.
Calculating Your Mileage Deduction: Two Routes to Choose From
Now, how do you smartly calculate your mileage deduction? The IRS offers you two choices, and your decision can significantly impact your tax savings.
1. The Standard Mileage Rate Method
This method is favored by many entrepreneurs for its simplicity. Rather than itemizing every vehicle expense, you just multiply your total business miles by the IRS mileage rate—70 cents per mile for 2025.
