If you have employees on the road, driving personal vehicles for work or employer-provided vehicles, check out these IRS updates for 2024.
First, IRS said in a recent notice that the business standard mileage rate for 2024 is 67 cents per mile.
That’s a 1.5-cent increase over the 2023 mileage rate of 65.5 cents per mile.
Reminder: If you’re relying on the business standard mileage rate, details can get blurred at the end of one year and the beginning of the next. Use the rate in effect when the employee was on the road, not when the expense report was submitted.
In its December 14, 2023, notice, IRS also released the portion of the business standard mileage rate treated as depreciation. That’ll be 30 cents per mile, up from 28 cents per mile.
As for two other types of rates, IRS announced a decrease from 22 to 21 cents per mile. That’s for travel related to:
- receiving medical care, and
- moving (until 2026, this is for qualified active-duty members of the Armed Forces only).
As usual, the rate for miles driven in service to charitable organizations remains 14 cents per mile. This rate is set by statute.
Next, in 2024 when computing the allowance under a fixed and variable rate plan, the standard automobile cost can’t exceed $62,000, up from $60,800. That’s important for any employers that use such a plan to reimburse employees.
A higher fair market value
Notice 2024-08 also includes updates that apply to employers using the vehicle cents-per-mile valuation rule or the fleet-average valuation rule to calculate the cost of personal use of an employer-provided vehicle.
Specifically, IRS changed the maximum fair market value (FMV) info needed for those valuation methods. The maximum FMV of vehicles on the date they’re first made available to employees increased from $60,800 in 2023 to $62,000 in 2024.
If the FMV of such vehicles exceeds that amount, you’ll need to use another valuation method to make sure you’re correctly withholding any income and employment taxes.
Providing more in transportation benefits
In an earlier announcement, Revenue Procedure 2023-34, IRS released new numbers for employers that make transportation benefits available to employees.
IRS said in 2024, you can exclude up to $315 per month from an employee’s income if you provide:
- rides in a commuter highway vehicle between that person’s home and workplace
- transit passes, and/or
- qualified parking.
That’s up from $300 per month in 2023.
Of course, it’s never “cruise-control mode” when it comes to fringe benefits.
For example, if you offer payments for rides in a commuter highway vehicle, double-check whether at least 80% of the vehicle’s mileage is for transporting employees back and forth between their homes and workplaces. Another requirement, based on your reasonable expectations, is that employees should occupy at least half of the vehicle’s seats (but don’t count the driver).
