On December 19, 2024, the Internal Revenue Service released the 2025 optional standard mileage rates, which are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. For 2025, only the business use rate will increase 3 cents.
Meaning beginning January 1, 2025, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
- 70 cents per mile driven for business use, up 3 cents from 2024.
- 21 cents per mile driven for medical purposes or for moving purposes for qualified active-duty members of the Armed Forces, unchanged from last year.
- 14 cents per mile driven in service of charitable organizations, the same rate as 2024.
These rates apply to all cars from fully electric and hybrid automobiles to gasoline and diesel-powered vehicles.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil, while the charitable rate is set by law.
Remember that California employers must fully reimburse employees for all expenses actually and necessarily incurred. The California Division of Labor Standards Enforcement (DLSE) has stated that using the IRS mileage rate will generally satisfy an employer’s obligation to reimburse for business-related vehicle expenses, absent evidence to the contrary. However, employees always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
January 1 is fast approaching so employers should ensure their expense reimbursement policies reflect the new, higher mileage rate.
Katie Culliton, Editor, CalChamber
CalChamber members can read more about Expense Reimbursements in the HR Library. Not a member? See how HRCalifornia can help you.
