The IRS Announces the 2024 Standard Mileage Rate

It’s that time of year again! The Internal Revenue Service (IRS) has released the optional standard mileage rate for 2024. The IRS has set the rate at 67 cents per business mile, an increase of 1.5 cents from 2023’s rate of 65.5 cents per mile for business-related travel. 

This announcement, made on December 14, 2023, applies to all electric, hybrid-electric, gasoline, and diesel-powered conventional vehicles (cars, vans, pickups or panel trucks). The IRS has also decreased the standard mileage rate to 21 cents per mile for medical or moving miles driven, a drop of 1 cent from 2023. The rate for charitable service miles driven, which was set by Congress, remains 14 cents per mile for 2024.

This adjustment in the IRS standard mileage rate coincides with the high costs of multiple elements of vehicle ownership in the United States. These include the continuing high costs of owning and maintaining a vehicle in the United States, multiple ongoing global conflicts, and  continuing supply chain and labor shortage issues. The U.S. Energy Information Administration (EIA) has also predicted that in 2024 average gas prices will be higher than in 2023, although they aren’t expected to reach the highs of 2022, in which gas prices spiked so drastically that it necessitated a midyear hike in the mileage rate.

The IRS calculates the standard mileage rate following an annual analysis of the various costs of owning and operating a vehicle. While mileage rates do tend to rise and fall with gas prices, they aren’t the only calculations that go into figuring out the yearly rate. A CompanyMileage analysis discovered that while fuel costs do account for about 30% of vehicle cost, the biggest factor is depreciation, which represents about 45% of the cost of owning and operating a motor vehicle. Insurance accounted for 12%, licenses registration and taxes for 7%, and tires and maintenance for about 3% each. 

The smallest changes in the standard mileage rate can make a substantial difference at the end of a fiscal year. For a mobile employee reimbursed at the new IRS rate for driving 10,000 miles a year, the 1.5 cents per mile adjustment means $150.00 more in their pocket. 

These updated mileage rates are optional for business owners to adopt. Businesses have the option of using different methodology, but many will choose to use the rate set by the IRS because it can be challenging to create a consistent way to calculate and track the cost of vehicle usage across a large fleet of mobile employees. 

CompanyMileage addresses these issues by using a unique method to calculate mileage for reimbursement. With SureMileage, our automated solution for calculating mileage, employees report their starting and ending points from their smartphones, and from there the system calculates the best route between them. The app then calculates the amount for reimbursement using the predetermined mileage rate, without making employees report odometer readings or maintain mileage logs. With SureMileage, your business will gain a layer of protection against instances of inaccurate reporting and reimbursement fraud. 

Features such as Quick Capture on the mobile app, which lets employees log their trip locations from their phones with the quick touch of a button, on-the-fly rate changes and an integrated Address Book make it simpler than ever for employees to input mileage, adjust rates and save destinations for future use. 

After calculating the new IRS mileage rates to your employees, reach out to CompanyMileage to find out how we can help you better manage your reimbursement process today!