The Internal Revenue Service’s business mileage standard rate increased to 70 cents on Jan. 1, leveraging data from Motus. By analyzing key automotive trends from the preceding year, Motus leverages its expertise to provide critical insights that have supported the IRS mileage rate since 1981.
The 2025 business mileage standard rate increased to 70 cents from the 2024 rate of 67 cents. The IRS business mileage standard cents-per-mile (CPM) rate provides a tax-free threshold for reimbursements that U.S. employers can offer to employees, in addition to individual tax deductions.
Driving costs have changed in 2024 due to some key factors and trends according to Motus, including:
Increased cost to buy a car: Vehicle acquisition costs continue to rise, increasing depreciation.
Increased cost to own a car:Auto insurance, maintenance, and repair costs all increased year-over-year.
Decreases in fuel prices: Although fuel prices have fluctuated throughout the year, overall fuel prices in 2024 have been lower than in 2023.
Standard Mileage Rates Since 2014
According to the IRS, business standard mileage rates have fluctuated in the past decade.
IRS annual mileage rates since 2014 were:
IRS Fixed and Variable Rate Reimbursement
For high-mileage drivers, the IRS Fixed and Variable Rate (FAVR) reimbursement method is a more accurate and equitable solution, according to Motus.
FAVR ensures compliance by tailoring reimbursements to localized costs of vehicle ownership and fuel aligned to the company’s standards for what the role requires. Together, FAVR and CPM programs enable companies to provide fair, compliant reimbursement strategies that address the needs of every driver, regardless of their annual business mileage.
“So many factors continue to impact driving costs in significant ways,” said Phong Nguyen, CEO of Motus. “It’s essential for business leaders to support their employees who drive as a part of their job - and rely on their vehicles for work - by implementing fair and accurate reimbursement strategies while also optimizing reimbursement spend and mitigating waste and risk.”
Other IRS Standard Mileage Rates
The IRS also suggests standard mileage rates for other situations, which include:
70 cents per mile driven for business use, up 3 cents from 2024.
21 cents per mile driven for medical purposes, the same as in 2024.
21 cents per mile driven for moving purposes for qualified active-duty members of the Armed Forces, unchanged from last year.
14 cents per mile driven in service of charitable organizations, equal to the rate in 2024.
The rates apply to fully-electric and hybrid automobiles, as well as gasoline and diesel-powered vehicles.
While the mileage rate for charitable use is set by statute, the 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, meanwhile, is based on only the variable costs from the annual study.
Under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Only taxpayers who are military members on active duty may claim a deduction for moving expenses incurred while relocating under orders to a permanent change of station.
Use of the standard mileage rates is optional. Taxpayers may instead choose to calculate the actual costs of using their vehicle.
Taxpayers using the standard mileage rate for a vehicle they own and use for business must choose to use the rate in the first year the automobile is available for business use. Then, in later years, they can choose to use the standard mileage rate or actual expenses.
Taxpayers using the standard mileage rate for a leased vehicle must employ that method for the entire lease period, including renewals.
Managing Vehicle Reimbursements with Motus
Motus said it gives companies visibility and control over their vehicle reimbursement and risks while improving employee satisfaction by offering the broadest range of tax-advantaged reimbursement programs.
Proactive optimization produces the best results over the life of every program – powered by superior service and support for savings that are IRS compliant. More than 3,000 companies rely on Motus to create optimized vehicle reimbursement strategies to meet their business objectives and to navigate changes that affect their employees.
