The Internal Revenue Service (IRS) has announced an increase in the standard mileage rate for business use of a vehicle for the 2025 tax year. Effective January 1, 2025, the rate will rise by 3 cents, from 67 cents to 70 cents per mile. 

This adjustment reflects the IRS’s annual assessment of the fixed and variable costs associated with operating an automobile, including factors such as fuel prices, maintenance expenses, and depreciation. Taxpayers have the option to use this standard mileage rate to calculate deductible vehicle expenses for business purposes, or they can choose to itemize actual expenses if that method provides a greater deduction. 

It’s important to note that under the Tax Cuts and Jobs Act, taxpayers cannot claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. Additionally, deductions for moving expenses are limited to active-duty members of the Armed Forces moving under orders to a permanent change of station. 

For agricultural professionals and businesses, this increase may impact budgeting and expense reporting for the upcoming year. Employers who reimburse employees for business travel using personal vehicles should adjust their reimbursement policies to align with the new IRS rate to ensure compliance and to provide fair compensation for travel-related expenses. 

For more detailed information, refer to the official IRS announcement.