The Internal Revenue Service (IRS) announced on December 19 that the business reimbursement mileage rate is rising to 70 cents per mile (up from 67 cents) beginning January 1, 2025.
Other mileage rates for use of vehicles used for other purposes remained unchanged from 2024, including:
- 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces.
- 14 cents per mile driven in service of charitable organizations.
While an increase in the standard rate was anticipated as fuel, auto insurance, maintenance, and repair costs have all risen significantly in the last year, the three cent increase year-over-year is the largest single year increase since 2022. Using the IRS recommended rate is strongly recommended, even though businesses are permitted to calculate the actual costs of employees using their personal vehicles, due to a legal presumption that the IRS calculation is “fair and reasonable”.
As a reminder, for businesses operating in California, the law clearly requires an employer to reimburse its employees for the business use of their personal vehicles (which does not include a regular commute from the employee’s home to the place of business). See California Labor Code Section 2802. Employees may be required to keep an actual mileage log to track their business travel in their personal vehicle, and the employer may rely upon the employee’s representation of mileage, when providing this reimbursement.
For more information on the status of the IRS business reimbursement mileage rate, and other pressing employment and business matters, please visit our website at https://koeglelaw.com/publications or reach out to our office for more information.
