Standard Mileage Rate 2025: Current IRS Rates and How to Claim
Whether you’re self-employed, a small business owner, or an employee using your personal vehicle for work, mileage reimbursement is an important way to offset vehicle expenses.
Instead of tracking every fuel receipt and maintenance cost, the IRS standard mileage rate provides a simple way to calculate deductible travel expenses.
In 2025, the IRS increased the standard mileage rate for business use to 70 cents per mile, reflecting changes in fuel costs, vehicle depreciation, and operating expenses.
Understanding these rates and how to claim mileage reimbursement correctly can help you maximize tax deductions and avoid compliance issues.
This guide will cover:
- The latest IRS mileage rates for 2025
- How to calculate and claim mileage deductions
- What types of travel qualify for mileage reimbursement
- IRS rules for employees, employers, and self-employed individuals
- Best practices for tracking mileage to stay compliant
What is mileage reimbursement?
Mileage reimbursement is a tax-deductible allowance provided to employees or self-employed individuals who use their personal vehicle for business purposes.
Instead of reimbursing actual expenses like fuel, maintenance, and depreciation, the IRS allows businesses and individuals to deduct mileage at a fixed per-mile rate each year.
Employers often reimburse employees for work-related driving, while self-employed individuals deduct their business mileage when filing taxes.
What is the federal mileage reimbursement rate?
The federal mileage reimbursement rate is set by the IRS annually to account for vehicle operating costs such as:
- Fuel prices
- Insurance
- Depreciation
- Repairs and maintenance
These rates apply to business, medical, moving, and charitable travel.
2025 IRS mileage rates
Starting January 1, 2025, the IRS standard mileage rates are:
- Business use: 70 cents per mile (up from 67 cents in 2024)
- Medical or moving purposes: 21 cents per mile (unchanged from 2024)
- Charitable organizations: 14 cents per mile (unchanged, set by law)
The 2025 increase in the business mileage rate reflects rising vehicle operating costs.
2024 IRS mileage rates
For comparison, the 2024 IRS mileage rates were:
- Business use: 67 cents per mile
- Medical or moving purposes: 21 cents per mile
- Charitable organizations: 14 cents per mile
The 3-cent increase for business mileage in 2025 highlights adjustments based on fuel and maintenance cost trends.
How standard mileage rates for business work
The IRS allows taxpayers to deduct business vehicle expenses using two methods:
- Standard mileage rate: Multiply total number of miles driven by the IRS rate for that year.
- Actual expenses method: Deduct costs like fuel, insurance, maintenance, and depreciation, prorated for business use.
Most taxpayers use the standard mileage rate because it simplifies record-keeping and often provides a higher deduction.
Calculating standard mileage vs. actual expenses for business
Standard mileage rate example:
- You drive 12,000 miles for business in 2025.
- IRS rate: 70 cents per mile.
- Deduction: $8,400 (12,000 × $0.70).
Actual expenses method example:
- Total vehicle costs: $10,000 (fuel, insurance, maintenance, depreciation).
- Business use: 70% of total mileage.
- Deduction: $7,000 (10,000 × 70%).
Pro tip: If your actual expenses exceed the standard mileage rate, it might be worth calculating both methods to determine the better deduction.
What travel qualifies for mileage reimbursement?
The IRS allows business mileage deductions for:
- Travel between job sites or offices.
- Driving to meet clients, customers, or vendors.
- Business-related errands, such as picking up supplies.
- Travel to a temporary work location (less than one year).
Note: Personal travel and commuting from home to a regular workplace do not qualify.
Is mileage reimbursement taxed?
Mileage reimbursements can be tax-free or taxable, depending on how they are handled:
- Accountable plans (IRS-compliant employer reimbursement): Not taxable to employees.
- Non-accountable plans (fixed allowances with no expense tracking): Taxable income to employees.
- Self-employed deductions: Reduce taxable income but are not considered direct reimbursements.
Proper documentation is required to avoid IRS penalties for misclassified reimbursements.
IRS mileage reimbursement rules
For employees
- Unreimbursed mileage is not deductible under current tax law (2018-2025).
- Employees should request mileage reimbursements through their employer.
For self-employed individuals
- Business mileage is deductible on Schedule C (Form 1040).
- Detailed mileage logs must be kept to support the deduction.
For employers
- Mileage reimbursements must follow IRS accountable plan rules to remain tax-free.
- Employers should maintain clear mileage policies to prevent IRS issues.
Keeping compliant records for your IRS mileage reimbursement
The IRS requires documentation for all mileage deductions. Your mileage log should include:
- Date of travel
- Starting and ending locations
- Total miles driven
- Purpose of the trip
Pro tip: Using Invoice Fly’s time tracking and receipt scanner tools can automate mileage tracking for accurate tax reporting.
How to claim tax deductions for eligible mileage
For self-employed individuals, mileage deductions are claimed on Schedule C (Form 1040). The total business mileage reported deduction is alongside other business expenses.
For employees, mileage reimbursements must be provided through an employer—they cannot be deducted on personal tax returns.
Tracking your mileage
Accurate mileage tracking is essential to maximize deductions and stay IRS-compliant.
- Use mileage tracking apps for automatic record-keeping.
- Maintain manual logs if apps aren’t available.
- Keep receipts and supporting documents for verification.
Pro tip: Using Invoice Fly’s reporting software makes mileage tracking easy and IRS-compliant.
Curious to calculate your mileage reimbursement?
Simply multiply your business miles by the IRS set rate:
Example:
- Business miles driven: 8,000
- 2025 IRS rate: 70 cents per mile
- Deduction: $5,600 (8,000 × $0.70)
Pro tip: Use Invoice Fly’s invoice maker to document and bill mileage expenses professionally.
Keep your business moving forward with smart mileage tracking
The 2025 IRS standard mileage rate offers a straightforward way to deduct business-related vehicle expenses. By keeping accurate records, choosing the right deduction method, and staying compliant, taxpayers can maximize their tax savings.
Why guess when you can track with confidence? Start managing your business miles the smart way with Invoice Fly today!
2025 Standard Mileage Rate FAQs
No, under current Internal Revenue Service (IRS) rules, employees cannot deduct unreimbursed business mileage on their personal tax returns. The Tax Cuts and Jobs Act (TCJA) suspended this deduction for employees from 2018 through 2025.
However, if your employer does not reimburse mileage, you may be able to negotiate mileage compensation through a company expense policy.
For independent contractors and sole proprietors, business-related mileage is still deductible using the standard mileage rate method or the actual expenses method on Schedule C (Form 1040).
To claim a deduction, the IRS requires detailed mileage records, including:
- Odometer readings at the start and end of each business trip.
- Date of travel and business purpose of the trip.
- Starting and ending locations of each journey.
- Total miles driven per trip (personal and business mileage should be tracked separately).
Using mileage tracking apps or maintaining a manual logbook can help ensure compliance and make tax filing easier.
Both deduction methods have pros and cons, and the best choice depends on your vehicle usage and total expenses.
- Standard mileage rate method: Simplifies record-keeping and accounts for fixed and variable costs like fuel, depreciation, and maintenance. This is often better for independent contractors and sole proprietors who drive regularly for business.
- Actual expenses method: Allows deductions for operating a vehicle, including fuel, insurance, repairs, depreciation, and lease payments. Best for those with higher vehicle costs.
Note: You must choose a method in the first year you use your vehicle for business. If you select the standard mileage rate method, you cannot switch to actual expenses for that vehicle later.
No, commuting from home to a regular place of business is considered a personal expense and is not deductible.
However, self-employed individuals and independent contractors can deduct:
- Miles driven between different work locations on the same day.
- Travel to meet clients, suppliers, or attend business meetings.
- Trips to temporary work sites lasting less than one year.
Pro tip: Keep separate records for commuting miles and business miles to avoid IRS issues.
Employers can reimburse mileage using the IRS standard mileage rate without it being taxable to employees, provided they follow an accountable plan.
To stay IRS-compliant, employers should:
- Require accurate mileage logs, including odometer readings and business purpose.
- Use the fixed and variable costs method if they prefer to reimburse based on actual vehicle expenses.
- Set clear company policies on mileage reimbursement for employees and independent contractors.
