The standard mileage rates used to calculate permissible tax deductions for the use of an automobile (e.g., a car, van, pickup truck, or panel truck) are changing for 2024.
That’s good news for gig workers and others who use their own vehicle for business purposes, since their rate is going up (which means a higher deduction).
However, people who drive long distances to receive medical care and members of the military relocating under military orders won’t be too happy, since their rates are going down. And if you use your own car while volunteering for a charity, your rate will remain the same.
Standard Mileage Rates for 2024
Starting Jan. 1, 2024, the standard mileage rates for use of an automobile will be as follows:
- 67¢ per mile for business use (up from 65.5¢ per mile for 2023)
- 21¢ per mile for medical transportation (down from 22¢ per mile for 2023)
- 21¢ per mile for military moving (down from 22¢ per mile for 2023)
- 14¢ per mile charitable use (no change from 2023)
The rates apply to electric and hybrid-electric vehicles, as well as to gasoline and diesel-powered cars, vans, and trucks.
Business Use of a Vehicle
If you’re self-employed (including side gigs), you can deduct expenses related to the use of your car, truck, or van for business uses. However, you can’t deduct expenses for the use of your vehicle while working for someone else (e.g., you’re an employee at a business that’s not your own). This write-off is claimed on Schedule C.
You can calculate the deduction for the business use of your vehicle in one of two ways. One option is to base the deduction on your actual expenses (e.g., gas, oil, gas, oil, repairs, tires, insurance, registration fees, depreciation, lease payments) attributable to the portion of the total miles driven that are for business. However, it can take a lot of time and effort keeping track of all those expenses.
The second option is to use the standard mileage rate. In that case, you still need to keep track of total miles driven for business purposes during the year, but then you just multiply that total by the standard mileage rate. For example, if you drove 1,200 miles for business this year, you would multiply those miles times 65.5¢ (1,200 x 0.655), so your deduction for the 2023 tax year would be $786.
WealthUp Tip: Parking fees and tolls paid while driving for your business are separately deductible whether you use the standard mileage rate or actual expenses.
Driving to Medical Appointments
If you itemize, you can deduct certain unreimbursed medical expenses exceeding 7.5% of your adjusted gross income (AGI) for the year. For example, if your AGI is $100,000, you qualify for an itemized deduction for any unreimbursed medical expenses above $7,500 ($100,000 x 7.5%). Therefore, if you have $10,000 of unreimbursed medical expenses for the year, that results in a $2,500 deduction ($10,000 – $7,500).
Medical expenses that qualify for this deduction include unreimbursed payments for doctor appointments, prescription drugs, dental work, glasses, crutches, and the like—and for transportation related to medical care. This includes any out-of-pocket costs for the use of your own car to get medical treatment, including gas, oil, parking, and tolls. However, it doesn’t include depreciation, insurance, general repair, or maintenance costs for your car.
Again, you can use your actual expenses or the standard mileage rate to calculate the amount of your deduction. As with other itemized deductions, you can claim this write-off on Schedule A.
Military Moving Expenses
If you’re an active duty member of the U.S. military, you can deduct unreimbursed moving expenses if your relocation is due to a military order and permanent change of station.
WealthUp Tip: A permanent change of station includes a move from your home to your first active duty post, from one permanent post to another, and from your last post to your home. A move from your last post generally must occur within one year of ending active duty.
So, if you drive yourself (including your spouse and dependents) to your new post, you can claim a deduction for your out-of-pocket car expenses, such as gas, oil, parking, and tolls.
As you may have guessed, you can use the actual expense method or the standard mileage rate to calculate your deduction. Use Form 3903 to report your deductible moving expenses.
Driving for Charity
If you itemize, you can generally deduct donations to charity. However, the charitable tax deduction isn’t just for donations of cash or property—you can generally deduct unreimbursed expenses you paid in connection with volunteer work for a charitable organization.
This includes travel expenses related to your volunteer service. So, if you use your own vehicle while volunteering for charity, you can deduct either your actual expenses (e.g., gas, oil, etc.) or 14¢ per mile (again, this mileage rate does not change from year to year). Parking fees and tolls are also deductible.
However, if you’re traveling away from home, there can’t be a significant amount of personal pleasure, recreation, or vacation-like activities. Otherwise, your travel expenses aren’t deductible.
