Business Standard Mileage Rate Increases to 67 Cents in 2024

The IRS announced that the business standard mileage rate for transportation expenses paid or incurred beginning January 1, 2024, will be 67 cents per mile, up 1.5 cents from 65.5 cents per mile for 2023 [Notice 2024-8, 12-14-23].

The mileage rate may be used to compute the amount to reimburse employees who are using their own cars for business purposes. It may also be used by employers that elect to use the "cents-per-mile" valuation method for purposes of determining the amount that needs to be imputed to an employee's income for personal use of certain company-owned or leased nonluxury vehicles (see The Payroll Source®, §3.2-2). However, it may not be used by employees in claiming a tax deduction for unreimbursed employee business expenses, since such deductions are suspended by the Tax Cuts and Jobs Act.

For vehicles put into service in 2024, the cents-per-mile valuation method and the fleet-average valuation rule can be used only if the vehicle does not have a fair market value of more than $62,000 ($60,800 in 2023).

REMINDER – Because of the 1.5 cent increase in the business standard mileage rate, employers reimbursing employees at the 2023 rate need to be mindful of the rate change. Employers should make sure they change to the 2024 rate for all affected travel on or after January 1, 2024. And remember that business miles driven in December 2023 that show up on an employee's expense report in 2024 are governed by the rules applicable to the corresponding 2023 mileage rate.