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People who use their cars for work will be able to deduct more money per mile on their taxes in the new year.
The Internal Revenue Service (IRS) announced this week that the standard mileage rate for business driving would increase by 2.5 cents per mile. Additionally, vehicles used for medical purposes will decrease by half a cent, which the agency says reflects “updated cost data and annual adjustments for inflation.”
The standard mileage rate is a number set by the IRS, expressed in cents per mile, that is used to calculate deductible costs related to using a personal vehicle for business purposes when filing federal taxes. Self-employed workers, gig workers, freelancers and small businesses who use personal vehicles for business purposes can claim the standard mileage deduction on their tax return. However, the standard mileage rate is also calculated for vehicles used for medical purposes, travel purposes for active duty members and for charitable works.
Traffic is blocked on Highway 110. (Keith Birmingham/MediaNews Group/Pasadena Star-News via Getty Images / Getty Images)
Overall, starting Jan. 1, standard mileage rates for using a car, van, pickup truck or panel truck will be 72.5 cents per mile. driven for professional use20.5 cents per mile driven for medical purposes, 20.5 cents per mile driven for travel purposes for certain active duty members of the armed forces and certain members of the intelligence community. But the rate per mile driven in service of charitable organizations will remain at 14 cents, the IRS said.
Cars travel on the Brooklyn-Queens Expressway (BQE) through the Dumbo neighborhood on November 2, 2024, in New York. (Gary Hershorn/Getty Images/Getty Images)
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The above rates apply to fully electric and hybrid automobiles, as well as gasoline and diesel vehicles. If taxpayers use a leased vehicle, the standard mileage rate must be applied for the entire duration of the lease, including renewals.
Cars traveling on the highway (Jonas Walzberg/photo alliance via Getty Images / Getty Images)
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The medical and moving rate, on the other hand, is based only on costs that increase when you drive more, like gas, oil changes and basic vehicle maintenance.
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However, the IRS noted that the standard mileage rate is optional for taxpayers. Instead, they can calculate the real costs of using their vehicle.
