The IRS raised the optional business mileage rate to 76 cents per mile from 72.5 cents for eligible travel on or after July 1, giving self-employed workers and businesses a larger deduction as fuel costs remain elevated.
IRS Broadens Relief Beyond Business Drivers
First reported by Fox News on Thursday, the agency said the change "results from recent increases in the price of fuel." It last made a midyear adjustment in 2022, when gasoline surged after Russia invaded Ukraine.
Medical and qualifying moving mileage rose to 23.5 cents from 20.5 cents, while charitable mileage remains fixed at 14 cents. Moving deductions generally apply only to eligible active-duty military personnel and certain intelligence-community members.
The rate covers more than gasoline. The IRS bases the business figure on fixed and variable vehicle costs, and it applies to gasoline, diesel, hybrid and electric vehicles. Eligible taxpayers may instead claim actual expenses.
Higher Rate Delivers A Larger Deduction
A driver logging 10,000 qualifying business miles from July through December could deduct $7,600, or $350 more than under the first-half rate. The deduction lowers taxable income, not the tax bill dollar for dollar. Ordinary commuting does not qualify, and most employees cannot deduct unreimbursed work travel.
Fuel Surge Threatens June’s Inflation Relief
The increase follows renewed pressure at the pump. Reuters said regular gasoline averaged $3.95 a gallon Thursday, nearly 80 cents above a year earlier, after Iran-war disruptions around the Strait of Hormuz drained U.S. inventories to their lowest seasonal level since 2012.
GasBuddy analyst Patrick De Haan earlier this week said he expected the national average to reach $4 "in the next 7-10 days, if not sooner," as the Strait of Hormuz conflict intensifies, while diesel could return to $5. Some states could cross the $4 threshold earlier.
June brought temporary relief. The Labor Department said gasoline prices fell 9.7% from May, helping annual inflation slow to 3.5%. However, Gasoline still cost 26.7% more than a year earlier, leaving drivers exposed to another energy-driven rebound.
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