The IRS has raised the optional standard mileage rate utilized in determining the deductible expenses associated with operating a vehicle for business purposes to 67 cents per mile, marking a 1.5-cent increase from the previous year, effective as of January 1, 2024 (as per Notice 2024-08).

Released on Thursday, the notice establishes the 2024 standard mileage rates at 21 cents per mile for medical or moving purposes for qualified active-duty members of the armed forces, reflecting a decrease of 1 cent from the prior year. The rate per mile driven in service of charitable organizations remains unchanged at 14 cents, as statutorily determined since 2022.

These rates are applicable to various vehicle types, including electric and hybrid-electric automobiles, as well as gasoline- and diesel-powered vehicles. The segment of the business standard mileage rate allocated for depreciation in calculating basis reductions will be 30 cents per mile for the year 2024.

Taxpayers have the option to compute the actual costs incurred when using their vehicle, rather than relying on the standard mileage rates. Additionally, Notice 2024-08 specifies the maximum standard automobile cost under a fixed-and-variable-rate (FAVR) plan at $62,000 for automobiles, including trucks and vans, marking an increase of $1,200 from the previous year. In a FAVR plan, a predetermined amount is considered substantiated for an employer’s reimbursement to employees for driving-related expenses incurred while performing services for the employer.

For purposes of the fleet-average valuation rule outlined in Regs. Sec. 1.61-21(d)(5)(v) and the vehicle cents-per-mile rule under Regs. Sec. 1.61-21(e), $62,000 also represents the maximum fair market value of automobiles, including trucks and vans, first made available in the calendar year 2024.