At the end of each year, the IRS releases an updated standard mileage rate that will be effective for the upcoming year. This figure is calculated by analyzing how much it currently costs to own and operate a vehicle in the United States and how these costs are expected to change throughout the year. 

A CompanyMileage analysis discovered that vehicle ownership costs are impacted by a range of expenses. The two biggest expenditures are fuel, which accounts for about 30% of vehicle ownership and operating costs, and depreciation, which represents about 45% of costs. Insurance accounts for 12%, licenses, registration, and taxes together make up 7%, and tires and maintenance each account for about 3% of costs.

Many factors can affect vehicle ownership and operating costs. In the last handful of years, for instance, gas prices, supply chain issues, and inflation have run rampant, causing vehicle costs—and by extension, the rate—to spike in response. 

In its relatively recent history, how have economic and other conditions played into changes in the standard mileage rate? Let’s take a look! 

Taking it Back

1980s-2000s

Let’s go back, shall we? All the way back to the 1980s, those halcyon days when neon was omnipresent, hair was huge, and the IRS standard mileage rate never rose above 25 cents per business mile. In 1980 the rate was set at 22 cents per mile, and it was sitting pretty at 24 cents in November of 1989. From 1995 through 2005 the mileage rate mostly rose steadily, barring a decrease from 32.5 to 31 cents per mile between 1998 and 1999, and a decrease of half a cent to 36 cents per mile from 2002 to 2003. 

2005

The first truly dramatic increase in the rate can be seen in 2005. In January of that year the rate was set at 40.5 cents, but in September was raised a whopping eight cents to 48.5 cents. One of the biggest contributing factors to this jump was the impact of the disaster wrought by Hurricane Katrina, which impacted the economy in multiple ways. Chief among these was an over 88% decrease in Gulf Coast oil production, leading to supply chain problems and massive spikes in the price of gas. The rate lowered by four cents for 2006 as Gulf Coast oil production began returning to pre-Katrina levels. 

2008

Another drastic mid-year increase was seen in July of 2008, when the rate increased from 50.5 cents to 58.5 cents per mile. That year, the United States was experiencing an economic downturn now known as the Great Recession. That, combined with high worldwide oil demand, led to record-high gas prices which were the main catalyst for the spike. For the next decade the standard mileage rate hovered in the 50s, seeing a low of 50 cents in 2010 once the economy had leveled out, and a high of 58 cents in 2019. 

Recent Changes: 2020-2024

Even in the last four years, the world has changed a lot—and so has the standard mileage rate. The last time the IRS announced a decrease in the standard mileage rate was ahead of 2021, when the rate dropped from 57.5 to 56 cents per mile. Since then, the rate has been on the rise, and currently sits at an all-time high of 67 cents—that’s a jump of eleven cents in less than half a decade! 

While fluctuating gas prices are at least partially to blame, gas isn’t the whole story. Even though gas prices have remained relatively steady since 2022, the rate continues to rise, due to the rising price tag of owning and operating a vehicle in the United States. In the last few years, the cost to repair or replace a vehicle has increased, largely due to supply chain issues, and this has led to an increase in car insurance premiums as a result. Furthermore, driving habits were negatively impacted by pandemic shutdowns, and we’ve seen both the number of car accidents and the severity of these accidents increase. 

No Matter the Rate, CompanyMileage Has You Covered

Unfortunately, your business has very little control over what happens to the standard mileage rate. There’s a ton of factors at play, and a million moving parts that can impact them. While you can’t do much about what the IRS decides the standard mileage rate should be, there’s plenty of measures you can take on your end to better manage employee mileage costs.

CompanyMileage created SureMileage to streamline the often overlooked mileage tracking and reimbursement process. Our software uses a unique point-to-point method to calculate the mileage for each work-related trip. When trips have been submitted for review and subsequently approved, employees are reimbursed at the rate your company has decided to use (which does not necessarily need to be the IRS rate). 

Not only does SureMileage eliminate the need for detailed manual logs and complicated mileage calculations, it also greatly reduces opportunities for inaccurate reporting and fraud. Our customers save up to 30% on mileage reimbursement expenses as a result.  

While some things might be beyond your control, efficient reimbursement management doesn’t have to be! Contact CompanyMileage today to find out more about how your organization can reimburse efficiently, and save money in the process.