Business Expense for Driving? IRS Increases 2025 Standard Mileage Rate

2025 Standard Mileage Rate Do you use your car for business? The Internal Revenue Service (IRS) announced a three-cent mileage rate increase this year.

 

Each year, the IRS announces changes in mileage rates used to calculate deductible figures for several user groups, including business, medical, charitable interests, and the military. This year the IRS boosted the mileage rate for business users to $.70 per mile, while leaving 2024 rates intact as follows:

  • Business use: 70 cents per mile
  • Use by a charitable organization: 14 cents per mile
  • Medical use: 21 cents per mile
  • Active military member moving use: 21 cents per mile

 

The annual mileage rates set for business are calculated on a yearly study of the variable and fixed costs of operating a car. The medical and military moving rates are calculated on an annual review of variable costs, and charitable use rates are set by statute.

 

If you drive your car only for business use, you can deduct ownership and operation costs. If you drive your car for business and pleasure, you can only deduct the actual cost of the business use. There are two methods for calculating your car deduction, either by using the standard mileage rate or actual expenses.

 

To deduct actual expenses, you will need to track the actual costs of your car for its business use only. This can include maintenance, license and registration, gas, and tires, among other costs. For the standard mileage rate, you must own or lease the car and use the standard mileage rate for the first year you use it for business purposes, among other limitations. 

 

To ensure you can support the deduction taken, be sure to log the business use of your car. If you are chosen for an IRS audit, your documentation should reflect trips taken, dates, and mileage claimed. As with any business expense, failure to document details of the business use of your car can see your deduction reduced or disallowed entirely. The devil is in the details—and so is your tax deduction.

 

If the IRS has questions about your deductions, speak with a reputable tax attorney for advice—before you respond to the IRS.

 

Speak with experienced criminal law attorneys in Chicago and Cleveland

The legal team at Robert J. Fedor, Esq., LLC delivers strong representation and guidance to those facing significant tax liability, offshore tax concerns, or payroll tax issues. Call 440-250-9709 or contact us today.

 

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