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The 2025 business mileage standard rate increased to 70 cents from the 2024 rate of 67 cents, effective Jan. 1, 2025, as released by the Internal Revenue Service (IRS).
Leveraging data from Motus, 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.
“So many factors continue to impact driving costs in significant ways,” says 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.”
Key takeaways:
- Driving costs have changed in 2024 due to some key factors and trends, including increased cost to buy a car; increased cost to own a car; and decreases in fuel prices.
- 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.
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