The Internal Revenue Service (IRS) has unveiled the 2025 business mileage standard rate of 70 cents, leveraging data from Motus, a leader in vehicle reimbursement and driver risk mitigation solutions. By analyzing key automotive trends from the preceding year, Motus leverages its expertise to provide critical insights that have supported the IRS mileage rate since 1981.
The 2025 business mileage standard rate increased to 70 cents from the 2024 rate of 67.0 cents and will go into effect January 1, 2025.
Driving costs have changed in 2024 due to some key factors and trends, including:
- Increased cost to buy a car: vehicle acquisition costs continue to rise, increasing depreciation.
- Increased cost to own a car: auto insurance, maintenance, and repair costs all increased year-over-year.
- Decreases in fuel prices: although fuel prices have fluctuated throughout the year, overall fuel prices in 2024 have been lower than in 2023.
The IRS business mileage standard cents-per-mile (CPM) rate provides a tax-free threshold for reimbursements that U.S. employers can offer to employees, in addition to individual tax deductions.
For high-mileage drivers, the IRS Fixed and Variable Rate (FAVR) reimbursement method is a more accurate and equitable solution. FAVR ensures compliance by tailoring reimbursements to localized costs of vehicle ownership and fuel aligned to the company’s standards for what the role requires.
Together, FAVR and CPM programs enable companies to provide fair, compliant reimbursement strategies that address the needs of every driver, regardless of their annual business mileage.
“So many factors continue to impact driving costs in significant ways,” said Phong Nguyen, CEO of Motus. “It’s essential for business leaders to support their employees who drive as a part of their job – and rely on their vehicles for work – by implementing fair and accurate reimbursement strategies while also optimizing reimbursement spend and mitigating waste and risk.”
Motus gives companies visibility and control over their vehicle reimbursement and risks while improving employee satisfaction by offering the broadest range of tax advantaged reimbursement programs. Proactive optimization produces the best results over the life of every program – powered by superior service and support for savings that are IRS compliant. Over 3,000 companies rely on Motus to create optimized vehicle reimbursement strategies to meet their business objectives and to navigate changes that affect their employees.
