2025 Standard Mileage Rates Released

Great news for business owners who drive for work - the IRS just announced the new mileage rates for 2025, and they're going up! Let's break down exactly what this means for your business and how to make the most of these deductions.

The New Numbers: 2025 Mileage Rates at a Glance

Here's what you can deduct for every mile you drive in 2025:

• Business miles: 70 cents (up from 67 cents in 2024)

• Medical or moving: 21 cents (down from 22 cents)

• Charitable work: 14 cents (unchanged)

What These Changes Mean for Your Business

Think about this: If you drive 10,000 business miles in 2025, you could deduct $7,000 from your taxes. That's $300 more than you could deduct in 2024! The IRS didn't just pull these numbers out of thin air - they're based on a detailed study of what it really costs to own and operate a vehicle, including gas, maintenance, and depreciation.

The Two Ways to Track Your Vehicle Expenses

Option 1: Standard Mileage Rate

This is like the "easy button" for vehicle deductions. Just multiply your business miles by 70 cents. Done! Plus (and many people don't know this), you can still add:

• Parking fees and tolls

• Property taxes for your vehicle

• Interest on your car loan (if you're self-employed)

Option 2: Actual Expenses

This method means tracking everything:

• Gas and oil

• Maintenance and repairs

• Insurance

• Registration fees

• Depreciation

• Lease payments

Pro Tips for Business Owners

The SUV Advantage

Got a heavy SUV (over 6,000 pounds)? You're in luck! In 2025, you might be able to deduct up to $31,300 using Section 179 expensing, plus take advantage of bonus depreciation. Just remember - if you sell the vehicle within five years, you might have to pay back some of that deduction.

Important Rules to Remember

• You can't switch between standard mileage and actual expenses year to year for the same vehicle

• If you use more than four vehicles for business at once, you can't use the standard rate

• Hired vehicles (like taxis) can't use the standard rate

Smart Record-Keeping Tips

Whether you choose standard mileage or actual expenses, good records are crucial. Here's what to track:

• Date of each business trip

• Where you went

• Business purpose

• Number of miles driven

• Starting and ending odometer readings

What About Employees?

If you have employees who drive their own cars for work:

• Their reimbursements are tax-free if they document their business miles

• They can't deduct unreimbursed mileage on their taxes (thanks to tax law changes through 2025)

• Consider setting up an accountable plan to reimburse them

Making the Most of Medical and Charitable Miles

While business miles get the highest rate, don't forget about:

• Medical trips: 21 cents per mile for medical appointments

• Charitable work: 14 cents per mile when volunteering

Plan Ahead for 2025

Start the new year right:

1. Choose your tracking method now (standard or actual)

2. Set up a reliable system for logging miles

3. Keep all vehicle-related receipts, just in case

4. Consider apps or digital tools for easier tracking

Need Help Making the Right Choice?

Deciding between standard mileage and actual expenses can be tricky. Consider factors like:

• How many miles you'll drive for business

• Your vehicle's age and maintenance costs

• Your record-keeping habits

• Your tax situation

Remember, while the standard rate is simpler, actual expenses might give you a bigger deduction in some cases, especially with new vehicles or if you have high operating costs.

Please use the link below to schedule a no cost consultation

https://calendly.com/rolandamcduffiecpa/20-min

Note: Tax laws and regulations can change. Always consult with a qualified tax professional for advice specific to your situation.