Understanding the IRS mileage rate is one of the most effective ways to reduce taxable income and save money. Whether you’re a freelancer, self-employed, or a business owner, knowing how to apply this rate correctly can lead to significant tax deductions each year.
This guide breaks down how the mileage rate works in 2025, how to calculate your deductions, and how to stay compliant with IRS record-keeping rules.
What Is the IRS Mileage Rate?
The IRS mileage rate is the standard reimbursement rate set by the Internal Revenue Service that allows taxpayers to deduct expenses related to business travel.
Instead of tracking every single gas receipt or maintenance cost, the IRS allows you to claim a standard per-mile deduction.
Key Benefits of the IRS Mileage Rate:
- Simplifies record-keeping for business travel.
- Reduces taxable income by deducting vehicle expenses.
- Works for both self-employed individuals and employees reimbursed by companies.
- Can be claimed without itemizing every single cost.
IRS Mileage Rate 2025 Overview
The IRS updates the mileage rate each year to reflect changing fuel prices and vehicle costs.
| Year | Business Mileage Rate | Medical/Moving | Charitable |
| 2023 | $0.655 per mile | $0.22 | $0.14 |
| 2024 | $0.67 per mile | $0.21 | $0.14 |
| 2025 | $0.70 per mile (est.) | $0.22 (est.) | $0.14 |
Note: The 2025 rate is subject to official IRS confirmation. Businesses and self-employed individuals should use the updated rate once published.
Who Can Claim the IRS Mileage Rate?
Not everyone can deduct mileage, but a wide range of taxpayers qualify.
Eligible Individuals:
- Self-employed freelancers and contractors
- Rideshare and delivery drivers
- Small business owners
- Real estate agents and consultants
- Employees receiving mileage reimbursement
Common Ineligible Mileage:
- Personal commuting (e.g., from home to your primary workplace)
- Personal errands
- Non-business recreational travel
How the IRS Mileage Rate Works
Instead of deducting actual costs like gas, insurance, and maintenance separately, the standard mileage deduction allows you to multiply the total business miles driven by the IRS mileage rate.
Example Calculation
If you drove 10,000 business miles in 2025 at $0.70 per mile:
10,000 miles × $0.70 = $7,000 deductible
This $7,000 can then be used to reduce your taxable income — which often results in thousands of dollars in tax savings.
How to Track Mileage Properly
To claim the deduction, the IRS requires detailed and accurate mileage logs.
Required Record Details:
- Date of the trip
- Starting and ending location
- Total miles driven
- Purpose of the trip
- Odometer reading (recommended)
Ways to Track Mileage
- Manual logbook — Simple but time-consuming.
- Mileage tracker app— Automates logging and ensures IRS compliance.
- Digital spreadsheets— Useful if paired with GPS or receipts.
Many freelancers and businesses prefer automated mileage tracking apps to avoid errors and save time.
Business vs. Personal Mileage: How to Separate Them
Keeping business and personal miles separate is essential. Mixing them can lead to audits or disallowed deductions.
| Category | Deductible | Example |
| Business | Yes | Driving to client meetings, deliveries, site visits |
| Personal commuting | No | Home to regular workplace |
| Mixed-purpose trips | Partial | Driving to store for both business and personal needs |
Tip: Always document the business purpose clearly to avoid issues during tax filing.
IRS Mileage Rate vs. Actual Expense Method
The IRS allows two main ways to claim vehicle expenses:
- Standard Mileage Rate(most common)
- Actual Expense Method
| Feature | Standard Mileage Rate | Actual Expense Method |
| Record-keeping | Simple | Complex (requires receipts and calculations) |
| Eligible costs | Mileage only | Gas, maintenance, insurance, depreciation |
| IRS audit risk | Low (if logs are clean) | Higher due to complexity |
| Best for | Most freelancers & small biz | High-cost vehicles or heavy business use |
Many people choose the mileage rate because it’s simpler and less time-consuming — yet still yields substantial deductions.
How IRS Mileage Reimbursement Works for Employees
If you’re an employee and your company reimburses you for mileage, they may use the IRS standard mileage rate as a benchmark. This reimbursement is typically:
- Non-taxable, if it matches or is below the standard rate
- Taxable, if it exceeds the IRS rate
Employees should maintain their own mileage records even if their employer tracks trips, to avoid disputes or missed deductions.
Common Mistakes to Avoid
Even experienced drivers and business owners make mileage deduction errors that can lead to lost savings or IRS scrutiny.
- Not keeping proper logs
- Mixing personal and business trips
- Forgetting to update mileage rates each year
- Relying on estimates instead of actual numbers
- Claiming commuting miles (which are not deductible)
A clean digital log is often your best defense during an IRS audit.
How to Maximize Your Tax Savings
The IRS mileage rate can offer hundreds to thousands of dollars in deductions annually. To make the most of it:
- Use a reliable mileage tracker to automate record-keeping.
- Plan routes efficiently to maximize business miles.
- Log mileage daily— don’t wait until tax season.
- Store digital backups of all records.
- Recheck IRS updates every year.
Quick Savings Example
- 15,000 business miles × $0.70 = $10,500 deduction
- If in a 24% tax bracket → saves approximately $2,520in taxes
Mileage Deductions for Gig Workers and Contractors
Gig workers (rideshare drivers, delivery drivers, etc.) benefit most from this deduction because they drive frequently and can log thousands of miles annually.
Examples of deductible business trips:
- Delivering groceries or packages
- Driving to pick up or drop off customers
- Visiting clients or suppliers
- Traveling between job sites
Preparing for Tax Season
When tax season approaches, having organized mileage data will make filing faster and more accurate.
- Export mileage reports from apps or logs
- Match mileage data with income records
- Report mileage deduction on Schedule C (self-employed) or relevant form
- Work with a tax preparer if unsure about calculations
Final Thoughts
The IRS mileage rate is one of the simplest and most effective tax deduction tools available to self-employed individuals, contractors, and businesses.
By tracking your miles accurately, separating personal trips, and applying the standard rate correctly, you can significantly reduce your taxable income — saving both time and money.
Start tracking your mileage early in the year, and let the IRS mileage rate work for your wallet instead of against it.
