If you use your car for business, you’ll be able to take a slightly bigger deduction based on the mileage you use…not much, but every penny counts, right?

At the end of December, a new standard was announced to IRS mileage rates for 2025, not just for business, but for several approved purposes. Below are the deductions, if you are using your own automobile:

  • Self-employed and business: 70 cents/mile (up from 67 cents in 2024)
  • Charities: 14 cents/mile (unchanged from 2024)
  • Medical: 21 cents/mile (unchanged from 2024)
  • Moving (military only): 21 cents/mile (unchanged from 2024)

It Gets Complicated

Before making your claim, you need to read the fine print. For example, the IRS says that if you use your car only for business purposes, you may deduct its entire cost of ownership and operation (subject to various limits). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use. So keep track of those miles!

The IRS explains that you can generally figure the amount of your deductible car expense by using one of two methods:

  1. Standard Mileage Rate: To use this method, you must own or lease the car. For the cost of operating your car for business, refer to the rates above.
  2. Actual Expenses: To use this method, you must determine what it actually costs to operate the car—including gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments)—attributable to the total business miles driven.

If you qualify to use both methods, you may want to figure your deduction both ways before choosing which one gives you the larger deduction.

Further details are available on the IRS site, Topic no. 510, Business use of car.

Questions? As always, you should always discuss deductions or any new changes by the IRS with a tax professional.

At Accu Data we stay on top of the latest tax changes as they relate to payroll to ensure our clients are always in compliance with new IRS laws and regulations! If you want to outsource your payroll for the first time or are looking to switch to a new payroll provider, contact us today for a free consultation and to learn more about our payroll and HCM capabilities.