The IRS has boosted the standard mileage rate for business use to help US citizens reimburse their mileage costs efficiently and fairly. The article covers everything you wish to know about the 2024 Mileage Reimbursement rates.
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2024 Mileage Reimbursement Rate
The IRS has announced the update on the Standard mileage rate for taxpayers to use the mileage rate and calculate the deductible costs of operating a vehicle for medical, charitable, business, or moving expenses.
The standard mileage rate determines the mileage reimbursement that allows the employer, a military person moving to a new place, or medical, or charitable automobile drivers to cover the cost of vehicle usage.
The following are mileage reimbursement rates for different purposes:
- For business-related automobile expenses, the rate is boosted to 67 cents per mile from the previous 65.5 cents per mile.
- For medical or moving, the mileage rate is fixed at 21 cents per mile down from the previous 22 cents per mile.
- For charitable use, the rate is unchanged at 14 cents per mile.
The IRS has also changed the standard automobile cost for calculator allowance for 2024 under variable and fixed-rate plans from $60,800 to $62,000.
The mileage reimbursement has kept things convenient for employees to get the reimbursement for using their vehicle for business purposes or covering the additional cost for the expenses they made during the business trips.
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The moving mileage reimbursement is allowed only for military personnel.
The mileage reimbursement rates are only applicable to the following vehicles:
- Electric Vehicles
- Hybrid-electric vehicles
- Gasoline powered vehicles
- Diesel-powered vehicles.
What qualifies for a business mileage Reimbursement?
The employees qualify for the IRS business mileage reimbursement when their business purpose meets the following requirements:
- When employees travel from their regular workplace to their temporary work location in the same firm.
- When you travel for client meetings related to your job, the miles you drive to and fro from the office to your meeting location count in reimbursement.
- When you travel to conferences and events related to your business or work.
- When you travel from a temporary work location to your second job.
- When you have some errands to run related to your work purposes.
Exclusions:
- Your travel miles for daily commuting to and from work do not count as business mileage reimbursement.
- When you travel for lunch during lunch hours.
- Travel miles for personal errands, or work does not count in mileage reimbursement.
Records you need to keep for IRS mileage Reimbursement
The employees or any other person wishing to acquire mileage reimbursement needs to know that they have to keep their travel records to claim the mileage reimbursement efficiently.
Here are the things that you need to record for each business trip:
- Time for trip
- Destination
- Purpose of each business trip
- Total miles driven
- Your total mileage of the year.
Tips to keep your mileage log
- To keep your mileage log and the total mileage you travel in a year, you can always use a mileage tracking app, to keep things simpler.
- You can integrate your mileage tracking app with your expense management software that many businesses use these days to allow employees to submit and track their mileage reimbursement applications without any hassle.
- You should keep the receipts of all your vehicle expenses during the business trip.
How to calculate your Mileage Reimbursement?
According to IRS rules, the employees can only use the two options to determine their mileage reimbursement rate for any given trip and later calculate the mileage reimbursement:
- When the employees travel in their vehicle due to the absence of state vehicle availability, the standard mileage rate applied to 67 cents per mile will be applicable to calculate their reimbursement.
- When the state vehicle is offered to you but you opt to travel in your own vehicle, the applicable reimbursement rate is 7 cents less than the current 67 cents per mile.
Here, the state vehicle stands for any vehicle owned or leased by the state or loaned to the state.
You can calculate your mileage reimbursement for your business based on the above type of business trip. Let us give you an example to make things easy for you: Suppose you have driven 350 miles in a year out of which 150 miles are used for business trips.
So, if you followed the first trip, your reimbursement rate is 67 cents per mile, meaning your mileage reimbursement for the year will be:
- 150 miles x 67 cents = $100.5
The mileage reimbursements are tax deductibles for the employers and it is counted as non-taxable income for employees. So, make sure you read all the rules of the IRS while using IRS mileage rates to calculate your mileage reimbursement.
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