The Internal Revenue Service (IRS) has recently announced an increase in the mileage rate for 2024. This news relieves many individuals and businesses who rely on this deduction to offset their travel expenses. The new rate, set at 67 cents per mile, is up from the previous rate of 65.5 cents per mile for 2023. This goes into effect beginning January 1st, 2024.
Diving Deeper Into This Increase
This increase reflects the rising fuel and vehicle maintenance costs and is intended to help taxpayers who use their personal vehicles for business purposes. It allows them to deduct a certain amount for each mile driven based on the IRS’s approved rate. This deduction can be particularly beneficial for small business owners and employees who often travel extensively as part of their job duties.
In addition to the 67 cents per mile driven for business use, the IRS also announced the standard mileage rate will be:
- 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces - a decrease of one cent
- 14 cents per mile driven in service of charitable organizations
These rates apply to electric and hybrid-electric vehicles and gasoline and diesel-powered vehicles. While this increase comes despite a recent decrease in fuel prices, vehicle acquisition costs have risen slightly, while vehicle depreciation has also accelerated. This means that the overall cost of vehicle ownership has also increased.
What This Means For Small Business Owners
For small business owners and employees who use their personal vehicles for work purposes, it’s essential to understand the increase in the mileage rate for 2024. The higher mileage rate means that employees can be reimbursed more per mile for their business-related travel. This can benefit both the employees and the business owners, as it helps offset the costs incurred by employees using their personal vehicles for work. Small business owners need to update their reimbursement policies and communicate the new mileage rate to employees to ensure they are appropriately compensated for their business-related travel expenses.
PEO Support For Small Business Owners
As the IRS announces the increased mileage rate for 2024, the road ahead for small business owners navigating tax implications appears more straightforward. Leveraging a professional employer organization (PEO) can be the key to unlocking a smoother journey. PEOs like GMS assist business owners in managing their HR tasks and, in this case, provide expert guidance on tax compliance, including maximizing deductions related to mileage expenses. By partnering with GMS, small business owners can confidently steer through these changes, focusing on growth while leaving the complexities of tax regulations in trusted hands. Contact GMS’ HR experts today!