The Internal Revenue Service (IRS) has released the 2024 optional standard mileage rates. These rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Effective January 1, 2024, the rates are:
- 67 cents per mile driven for business use. This is an increase of 1.5 cents from the rate set in 2023.
- 21 cents per mile driven for medical or moving purposes. This is a decrease of 1 cent from the rate set in 2023.
- 14 cents per mile driven in service of charitable organizations. This rate remains unchanged and can only be changed by an act of Congress.
Note: The rates apply to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.
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Limitations created under Tax Cuts and Jobs Act of 2017
Under the Tax Cuts and Jobs Act of 2017, taxpayers cannot:
- claim a miscellaneous itemized deduction for unreimbursed employee travel expenses and,
- cannot claim a deduction for moving expenses, unless they are members of the Armed Forces on active duty moving under orders to a permanent change of station. See Moving Expenses for Members of the Armed Forces for more details
Taxpayers can calculate the actual costs of using their vehicle rather than using the standard mileage rates. Taxpayers can usually only use the standard mileage rate in the first year a car is available for business use. In later years, taxpayers can choose either the standard mileage rate or actual expenses.
Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals). This applies if the standard mileage rate is chosen.
What does the business mileage rate increase mean for churches?
Increased amounts of reimbursement represent increased budget expenses, and that means adjusting budgets in ways that affect other ministry spending.
Conversely, eliminating or reducing reimbursements shifts the burden to pastors and employees using personal vehicles for church-related business.
Note: Unreimbursed employee business expenses are not deductible under the Tax Cuts and Jobs Act of 2017 (the “Act”). As a result, pastors and employees with unreimbursed mileage cannot seek tax relief on next year’s federal income tax returns. The act allows for a reinstatement of the deduction for unreimbursed employee business expenses after 2025.
You may also want read through this Q&A with CPA and Church Law & Tax Senior Editorial Advisor Michael Batts.
One final note:
Churches with an accountable reimbursement arrangement can reimburse eligible employees who use their vehicles for church-related business. Employees and pastors must properly track and document their business miles under these arrangements.
Unreimbursed employee business expenses are not deductible. Therefore, employees can no longer calculate a mileage deduction on their annual tax returns. Current
