2025 IRS Mileage Rate Announced

Employers who use the IRS standard mileage to reimburse employees who drive their personal cars on company business rate will need to pay a little more in 2025. The IRS announced on December 19 that the standard mileage rate for business use will increase to 70 cents per mile on January 1, 2025, up from 67 cents in 2024.    

The IRS also announced the following 2025 rates, which are the same as 2024 levels:

• 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the armed forces.
• 14 cents per mile driven in service of charitable organizations.

These rates apply to electric and hybrid-electric automobiles, including gasoline- and diesel-powered vehicles.

Why This Matters

California’s Labor Commissioner has found that the IRS mileage reimbursement rate is “reasonable” for purposes of complying with Labor Code Section 2802. LC 2802 requires employers to reimburse employees for all reasonable and necessary business expenses, such as using a personal vehicle for work purposes.

We encourage employers to use the standard mileage rate to pay tax-free reimbursements to employees who use their own vehicles for business as an alternative to tracking actual costs for operating an automobile for business use.

Next Steps

• Review your expense reimbursement policies.
• Utilizing the IRS mileage reimbursement rate for your employees is smart and easy. It covers all of their expenses including gas, insurance, and vehicle maintenance.
• Notify your controller/bookkeeper or whomever facilitates your expense reimbursements of this new increase.
• Review your remote worker policy – is it time for an update? Have you clearly designated and documented your 100% remote employees vs. hybrid employees?  
• It’s important that you are accurately paying your employees not only for their drive time but also for any business expenses incurred on behalf of your company.