2025 IRS Mileage Rate Update: New Rules for Freelancers & Small Businesses
The IRS has officially released the 2025 Standard Mileage Rates, and every freelancer, gig worker, and small business owner needs to update their expense tracking right away. The business mileage rate has increased to 70 cents per mile in 2025, up from 67 cents in 2024, which means you could be leaving hundreds of dollars of legal tax deductions on the table if you still use last year’s numbers.
This guide explains the new 2025 IRS mileage rules, who qualifies, which trips actually count, how to keep an audit-proof mileage log, and how to choose between the standard mileage rate and the actual expense method.
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1. 2025 IRS Standard Mileage Rates (Official Numbers)
From January 1, 2025, the IRS standard mileage rates are:
- Business use: 70 cents per mile
- Medical purposes: 21 cents per mile
- Moving purposes (qualified active-duty military only): 21 cents per mile
- Charitable use: 14 cents per mile (set by law, unchanged)
These rates apply to cars, vans, pickups, and panel trucks, including electric and hybrid vehicles. Using the wrong rate (for example, 67¢ instead of 70¢) means a freelancer driving 10,000 business miles could underclaim by $300 in deductions.
2. 2024 vs 2025 Mileage Rate Comparison
| Category |
2024 Rate (cents/mile) |
2025 Rate (cents/mile) |
Change |
| Business (self-employed / small business) |
67 |
70 |
+3 |
| Medical |
21 |
21 |
No change |
| Moving (active-duty military) |
21 |
21 |
No change |
| Charitable |
14 |
14 |
No change |
For most freelancers and small businesses, only the business mileage rate is relevant, and that is where the 3-cent increase makes a noticeable difference.
3. Who Can Use the 2025 IRS Mileage Rate?
The 2025 business mileage rate primarily applies to:
- Freelancers and independent contractors (Schedule C filers)
- Small business owners using their personal vehicle for business
- Gig workers (rideshare, delivery, field services, etc.)
- Self-employed professionals who travel to clients or job sites
Most W-2 employees cannot claim unreimbursed mileage as a deduction during the current Tax Cuts and Jobs Act suspension period. Instead, they usually rely on employer reimbursement policies.
4. What Counts as Business Mileage in 2025?
These types of trips generally qualify as business mileage:
- Driving from your home office to client locations or job sites
- Traveling between two business locations in the same day
- Picking up supplies, equipment, or inventory
- Driving for gig platforms (rideshare, food delivery, parcel delivery)
- Bank trips or post office runs for business purposes
These trips usually do not qualify:
- Daily commuting from home to a regular office or job location
- Purely personal errands, even if you take a work call on the way
- Trips primarily for personal reasons with only minor business activity
5. Record-Keeping Rules: What the IRS Expects in 2025
To safely claim the 70-cent 2025 business mileage rate, you should keep a contemporaneous mileage log that includes:
- Date of each trip
- Starting point and destination
- Business purpose of the trip
- Starting and ending odometer readings
- Total business miles for each trip
Acceptable formats:
- Paper mileage logbook
- Spreadsheet or digital log
- Dedicated mileage tracking apps
Keep your records for at least three years after you file the tax return that includes the deduction, in case of an IRS audit.
6. Standard Mileage vs Actual Expense Method
Standard Mileage Method (70¢ per mile in 2025)
- Multiply your qualifying business miles by 0.70
- Rate already factors in fuel, maintenance, repairs, insurance, registration, and depreciation
- Simple, fast, and ideal for most freelancers and small businesses
Actual Expense Method
- Track every car-related cost (fuel, repairs, insurance, registration, lease payments, etc.)
- Apply your business-use percentage to those costs
- Can give a bigger deduction for expensive vehicles or very high running costs
Important rule: if you own the vehicle, you generally must choose the standard mileage rate in the first year the car is used for business if you want the option to use it later. For leased vehicles, if you choose the standard mileage rate, you must keep using it for the entire lease term.
7. Quick 2025 Mileage Checklist for Freelancers & Small Businesses
- Update your bookkeeping or mileage app to the 70¢ 2025 business rate
- Start a fresh mileage log from January 1, 2025
- Separate business and personal trips clearly
- Store any supporting documents (invoices, calendars, client meeting notes)
- Decide early whether you will use the standard mileage method or actual expenses
- Review your log quarterly to make sure nothing is missing
8. International Comparison (Brief)
Other countries use similar concepts but with different rules:
- UK: HMRC “Approved Mileage Allowance Payments (AMAP)” for business miles.
- Canada: CRA “Automobile Allowance Rates” for business kilometers.
- U.S.: IRS standard mileage rate system with a 2025 business rate of 70¢ per mile.
If you work across borders, always check each country’s local rules; U.S. IRS mileage rules usually apply to U.S. tax residents and U.S.-source business activity.
Conclusion
The 2025 IRS business mileage rate of 70 cents per mile is a simple but powerful way for freelancers and small businesses to reduce taxable income legally. The key is accuracy: correct rates, clearly documented trips, and a consistent method (standard mileage or actual expenses). With just a few minutes of setup and good mileage habits, you can turn everyday driving into real tax savings at filing time.
FAQ
1. Can I change from the actual expense method to the standard mileage method in 2025?
If you own the vehicle, you generally must have used the standard mileage rate in the first year it was placed in business service in order to use it in later years. If you started with actual expenses in the first year, switching may be restricted. For leased vehicles, once you choose the standard mileage rate, you must continue with it for the entire lease term.
2. Do I need fuel receipts when I use the 70¢ standard mileage rate?
No. When you use the standard mileage rate, you do not need fuel receipts for the deduction itself. However, you must keep a detailed mileage log that shows dates, business purpose, and total miles for each trip.
3. Can employees still deduct unreimbursed mileage on their tax returns?
In most cases, no. Under current law, unreimbursed employee business expenses (including mileage) are suspended as itemized deductions until at least the 2026 tax year. Employees who drive for work usually need to seek reimbursement from their employer instead.
Official References & Further Reading
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Summary
The 2025 IRS standard mileage rate for business use is 70¢ per mile, with medical and moving mileage at 21¢ and charitable mileage at 14¢. This article explains who qualifies, which trips count, how to keep a compliant mileage log, and how to decide between standard mileage and actual expense methods so freelancers and small business owners can safely maximise their tax deductions.
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