The IRS announced that the business standard mileage rate for transportation expenses paid or incurred beginning January 1, 2025, will be 70 cents per mile, up three cents from 67 cents per mile for 2024 [Notice 2025-5, 12-19-24].
Vehicles Put Into Service in 2025
For vehicles put into service in 2025, 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 $61,200 ($62,000 in 2024).
Make Sure to Use the Correct Rate
Because of the three-cent increase in the business standard mileage rate, employers reimbursing employees at the 2024 rate need to be mindful of the rate change. Employers should make sure they change to the 2025 rate for all affected travel on or after January 1, 2025. And remember that business miles driven in December 2024 that show up on an employee’s expense report in 2025 are governed by the rules applicable to the corresponding 2024 mileage rate.
For More Information
For more information, see the PAYO Compliance Update, Business Standard Mileage Rate Increases to 70 Cents in 2025. Compliance updates are emailed to PayrollOrg members and are also available on the Compliance Updates webpage.
To learn more about federal and state laws, regulations, and information to keep your company’s payroll operations in compliance, check out Payroll Source Plus!
Rayna Alexander, Esq., is Editor of Payroll Information Resources for PayrollOrg.
