The nationwide price of gasoline has experienced an increase compared to previous years. Therefore, the IRS has announced an adjustment to the optional standard mileage rate for 2025, which is used to determine the deductible cost for operating an automobile for business purposes.
The new cents-per-mile rate has been set at 70 cents per mile.

In 2024, the rate was 67 cents per mile. This updated rate applies to gasoline and diesel-powered vehicles as well as electric and hybrid-electric options.
The process of calculating rates
The 3-cent increase from the 2024 rate goes along with the recent price of gas. On January 17, 2025, the national average price of a gallon of regular gas was $3.11, compared with $3.08 a year earlier, according to AAA Fuel Prices. However, the standard mileage rate is calculated based on all the costs involved in driving a vehicle — not just the price of gas.
The business cents-per-mile rate is adjusted annually. It is based on an annual study commissioned by the IRS about the fixed and variable costs of operating a vehicle, including gas, maintenance, repairs and depreciation. Occasionally, if there is a substantial change in average gas prices, the IRS will change the cents-per-mile rate midyear.
Standard rate or real expenses
Businesses can generally deduct the actual expenses attributable to business use of a vehicle. These include gas, oil, tires, insurance, repairs, licenses and vehicle registration fees. In addition, you can claim a depreciation allowance for the vehicle. However, in many cases, certain limits apply to depreciation write-offs on vehicles that do not apply to other types of business assets.
The cents-per-mile rate is beneficial if you do not want to keep track of actual vehicle-related expenses. With this method, you do not have to account for all your actual expenses. However, you still must record certain information, such as the mileage for each business trip, the date and the destination. There are different apps that you can download to help you track your business mileage.
Using the cents-per-mile rate is also popular with businesses that reimburse employees for business use of their personal vehicles. These reimbursements can help attract and retain employees who drive their personal vehicles a great deal for business purposes. Why? Under current law, employees can not deduct unreimbursed employee business expenses, such as business mileage, on their own income tax returns.
If you do use the cents-per-mile rate, keep in mind that you must comply with various rules. If you do not comply, the reimbursements could be considered taxable wages to the employees.
When you can not use the standard rate
There are specific instances where the cents-per-mile rate may not be applicable. The decision partly depends on how deductions for the same vehicle have been claimed in in prior years. Additionally, it may depend on whether the vehicle is newly acquired for business use this year or if you intend to capitalize on specific first-year depreciation tax benefits.
As evidenced, multiple factors must be considered when deciding whether to utilize the standard mileage rate for deducting vehicle expenses. Should you have questions about tracking and claiming such expenses in 2025, or claiming 2024 expenses on your 2024 income tax return, consult with your Rudler, PSC advisor at 859-331-1717.
RUDLER, PSC CPAs and Business Advisors
This week's Rudler Review is presented by Brandon Hughes, Staff Accountant and Evan Kandra, CPA.
If you would like to discuss your particular situation, contact Brandon or Evan at 859-331-1717.


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