You've probably heard the news by now, but the IRS finally bumped the numbers. Starting January 1, 2025, the government mileage rate 2025 is officially 70 cents per mile for business use. That is a three-cent jump from last year. It might not sound like much when you're just grabbing coffee for the office, but if you’re a road warrior or running a fleet, those pennies add up to serious cash.
Honestly, people get tripped up on these rates every single year. They think "government mileage" is just one big blanket number, but it's actually split into three distinct buckets. If you're driving for a charity, you're stuck at 14 cents. That rate is "statutory," which is basically government-speak for "Congress hasn't touched it in decades." Then you’ve got medical and moving miles, which are holding steady at 21 cents for 2025.
Why the government mileage rate 2025 went up
So why did the IRS decide we needed more money for driving? It isn't just about the price of a gallon of gas. In fact, gas prices have been kind of all over the place lately, sometimes even dipping. The real culprits are the "fixed" costs—the stuff that drains your wallet even when the car is parked in the driveway.
Insurance is the big one. Have you seen your premiums lately? They’re skyrocketing because parts are harder to find and mechanics are charging more for labor. Then you have depreciation. The IRS actually baked a 33-cent-per-mile depreciation allocation into that 70-cent rate for 2025. Basically, they’re acknowledging that every mile you drive is slowly killing your car’s resale value.
✨ Don't miss: Chewy Class Action Lawsuit: What Really Happened With the Autoship Overcharge Claims
The Breakdown for 2025
- Business miles: 70 cents (Up from 67 in 2024)
- Medical & Moving (Military only): 21 cents (No change)
- Charitable miles: 14 cents (Never changes, seemingly)
It’s worth noting that the "moving" deduction isn't for everyone anymore. Thanks to the Tax Cuts and Jobs Act, only active-duty military members moving under orders can actually claim that 21-cent rate. For everyone else, moving expenses are a "nothing burger" on your federal taxes until at least 2026.
The "Actual Expense" Trap
Most people just take the 70 cents and call it a day. It’s easy. You track your miles, multiply by 0.70, and boom—tax deduction. But is it always the best move?
Kinda. But not always.
You have the option to use the "Actual Expense Method." This means you track everything: gas, oil changes, new tires, insurance, registration fees, and even lease payments. If you drive a gas-guzzling heavy SUV or an expensive electric vehicle with massive insurance costs, the actual expenses might actually beat the government mileage rate 2025.
However, there is a catch. If you want to use the standard rate, you must use it in the first year the car is available for business. If you start with actual expenses, you're usually locked in for the life of that vehicle. It’s a bit of a "one-way street" situation that catches a lot of freelancers off guard.
Common Myths and Realities
I see this all the time: employees thinking they can deduct their unreimbursed mileage on their personal 1040.
Nope. Not anymore.
💡 You might also like: Caesars Entertainment Rotunda Demolition Plans: What Really Happened
Since 2018, the federal government stopped letting W-2 employees deduct work-related expenses. If your boss doesn’t reimburse you at the government mileage rate 2025, you’re basically just eating that cost. Now, some states like California are different. In Cali, employers are generally required to reimburse you for the actual cost of driving, and they usually use the IRS rate as a "safe harbor."
But on the federal level? If you aren't self-employed or a business owner, that 70-cent rate is basically just a suggestion for your employer, not a tax break you can claim yourself.
How to actually keep your money
Tracking is the bane of everyone's existence. "I'll remember to write it down later" is the biggest lie we tell ourselves. The IRS is notoriously picky about this. If you get audited, a "guesstimate" of your mileage will get tossed out faster than a bad habit.
You need a log. Date, destination, business purpose, and starting/ending odometer readings. Honestly, use an app. There are dozens of them that run in the background and track your drives via GPS. It makes life so much easier when tax season rolls around and you realize you have 4,000 miles of deductions you totally forgot about.
What about EVs?
This is a question I get a lot. Does the government mileage rate 2025 apply to Teslas and Lightnings? Yes. The IRS doesn't care if you're burning gas or electrons. You get the same 70 cents. For many EV owners, this is actually a huge win because the "fuel" cost per mile is way lower than the national average, but you still get the full deduction.
Moving forward with the 2025 rates
If you're running a small business, update your reimbursement software right now. Seriously. Don't wait until February. If you’re self-employed, start a fresh mileage log for the new year.
Take these steps today:
- Update your company's internal reimbursement policy to 70 cents per mile.
- Review your 2024 logs to ensure you haven't missed any "last minute" trips before the rate changes.
- Check if your vehicle qualifies for Section 179 depreciation if it weighs over 6,000 pounds—sometimes that’s a better deal than the standard mileage rate.
- Download a dedicated mileage tracking app to automate your 2025 records.
Adjusting to these changes early saves you a massive headache next April. The jump to 70 cents is a decent reflection of how expensive it has become to keep a car on the road, so make sure you're actually claiming every penny you're entitled to.