If workers for your organization receive a mileage reimbursement, it is important to know who can claim mileage on their tax return. The rules for 2024 make clear which workers are eligible for a tax deduction and which are not.
The current rules cover tax years 2018-2025, when the 2017 tax cuts expire. These rules separate employed workers from independent contractors. This distinction determines who can deduct mileage on their taxes.
Until 2026, only self-employed workers can write off mileage for tax purposes. This rule was established by the Tax Cuts and Jobs Act for tax years 2018-2025. This law expires at the end of 2025 unless Congress acts to extend it.
W-2 employees cannot claim business mileage on their tax returns. This is because the Tax Cuts and Jobs Act eliminated miscellaneous tax deductions. Prior to tax year 2018 employees could deduct business mileage using the IRS standard business rate.
Only self-employed workers can deduct vehicle expenses. For 2024 taxes, a W-2 employee cannot deduct business expenses at all. These expenses fall under the eliminated miscellaneous tax deduction. As with mileage, vehicle expenses do not count as itemized deductions for employees.
For tax year 2024, 1099 workers can still claim business mileage on their tax returns. The IRS treats these workers as self-employed independent contractors. So they can deduct business mileage on Schedule C of their tax returns. The 2024 IRS business mileage rate for tax deductions is $.67/mile.
For eligible workers, it is essential to maintain an accurate record of business trips and mileage. This mileage record should include:
Using these records, you simply calculate the total business mileage for the year and multiply it by $.67/mile. This is the business mileage rate for 2024. To make record-keeping easier, try using a mileage tracking app.
Employees are eligible for tax-free mileage reimbursements from their employers. To set up a non-taxable plan, businesses should adhere to the rules in IRS Publication 463.
An IRS-approved mileage log must include dates, destinations, purpose, and mileage for all business trips. Personal mileage and detours should be left off of the the log. A log can take the form of a spreadsheet or a report generated by a mileage app.
For more in-depth information about how to keep mileage reimbursements tax-free, read our guide to Publication 463.
When you track your own mileage or issue reimbursements to employees, it helps to have a convenient mileage capture system. There are many apps on the market to choose from. The best ones have the following features:
To learn more about choosing the best mileage tracker, read our mileage tracking checklist.
Or sign up for a free trial of the mLog mileage app.