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2025 IRS Standard Mileage Rates | IRS Tax Lawyer & Attorney

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On December 19, 2024, the IRS updated the optional standard mileage for the calculation of deductible costs of operating an automobile (sedans, vans, pickups and panel trucks) for business, charitable, medical or moving purposes. Let’s discuss in more detail these new 2025 IRS Standard Mileage Rates.

2025 IRS Standard Mileage Rates for Business Usage

For the tax year 2025, the business-use cost of operating a vehicle will be 70 cents per mile. This is 3 cents higher than in 2024. The standard mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile.

As in previous years, a taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

2025 IRS Standard Mileage Rates for Medical and Moving Purposes

For the tax year 2025, the medical and moving cost of operating a vehicle will be 21 cents per mile. This is the same as in 2024. The rate for medical and moving purposes is based on the variable costs.

2025 IRS Standard Mileage Rates for Charitable Purposes

For the tax year 2025, the costs of operating a vehicle in the service of charitable organizations will be 14 cents per mile. This is also the same as in 2024. The statute sets charitable rate which remains unchanged.

2025 IRS Standard Mileage Rates vs. Actual Costs vs. Miscellaneous Itemized Deductions

It is important to note that under the Tax Cuts and Jobs Act, taxpayers can no longer claim a miscellaneous itemized deduction for unreimbursed employee travel expenses. With the exception of active duty members of Armed Forces, taxpayers also cannot claim a deduction for moving expenses. Notice-2019-02.

However, taxpayers are not forced to use the standard mileage rates; rather, this is optional. Sherayzen Law Office advises taxpayers that they have the option of calculating the actual costs of using a vehicle rather than using the standard mileage rates. If the actual-cost method is chosen, then all of the actual expenses associated with the business use of a vehicle can be used: lease payments, maintenance and repairs, tires, gasoline (including all taxes), oil, insurance, et cetera.

IRS Notice 2025-05

IRS Notice 2025-05, posted on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan. In addition, for employer-provided vehicles, the Notice provides the maximum fair market value of automobiles first made available to employees for personal use in calendar year 2025 for which employers may use the fleet-average valuation rule in § 1.61-21(d)(5)(v) or the vehicle cents-per-mile valuation rule in § 1.61-21(e).

Higher OVDP Penalty Risk for US Taxpayers With Foreign Accounts

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December of 2015 was one of the most successful months for the DOJ’s Swiss Bank Program as nearly a record number of banks signed non-prosecution agreements. This success for the DOJ means that more and more of non-compliant US taxpayers with foreign accounts are likely to deal with Higher OVDP Penalty with respect to their undisclosed foreign accounts.

DOJ’s Swiss Bank Program

The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (Program) was announced by the US Department of Justice on August 29, 2013. The Program was intended to achieve multiple goals, but there are four of them that are most important to the understanding of the Higher OVDP Penalty and the Program.

First, this was an “offer that one cannot refuse” for the Swiss banks– the Program was intended to “allow” (or force) Swiss banks to bring themselves into compliance with US tax laws. In exchange, the Swiss banks received a non-prosecution agreement that promised them protection from US legal enforcement actions.

Second, the Program was intended to obtain as much information as possible about non-compliant US taxpayers with foreign accounts.

The third important goal was to create an atmosphere of global enforcement that would make US voluntary disclosure the most rational choice for non-compliant US taxpayers with foreign accounts given the risk of IRS discovery of their undisclosed foreign accounts.

Fourth, the Program was intended to pave the way for easier acceptance of FATCA throughout the world by demonstrating what could potentially happen in any country that decides to resist the implementation of FATCA.

It must be stated that the Swiss Bank Program has been a spectacular success for the DOJ and the IRS. Both, the banks and non-compliant US taxpayers with foreign accounts flocked to the voluntary disclosure programs. Moreover, today, FATCA is the new global standard of international tax enforcement.

2014 OVDP

The current 2014 IRS Offshore Voluntary Disclosure Program is a modification of 2012 OVDP which, in turn, was the continuation of a series of prior IRS offshore voluntary disclosure programs (particularly 2011 OVDI). The 2014 OVDP is designed to help non-compliant US taxpayers with foreign accounts to bring their tax affairs into compliance with US tax laws.

2014 OVDP has a two-tier penalty system. The 50% penalty rate applies to US taxpayers with foreign accounts in the banks on the special IRS list. The 27.5% penalty rate applies to everyone else.

Influence of the Program on the OVDP

The Swiss Bank Program has a direct impact on the IRS Offshore Voluntary Disclosure Program because every Swiss Bank that signs a Non-Prosecution Agreement under the Program is automatically added to the 50% penalty list of foreign banks.

Thus, as more and more Swiss Banks reach an agreement with the DOJ under the Program, the list of 50% penalty banks keeps expanding and so does the list of US taxpayers with foreign accounts who may be subject to this higher penalty rate.

What Should Non-Compliant US Taxpayers With Foreign Accounts Do?

The growing risk of higher OVDP penalty means that non-compliant US taxpayers with foreign accounts should explore their voluntary disclosure options as soon as possible by contacting an experienced international tax lawyer.

It is a mistake to assume that 50% penalty list will grow only as a result of the Swiss Bank Program. Even today, the list already contains banks which are located outside of the United States (such as HSBC India and Israeli Bank Leumi). This means that any bank in almost any part of the world may tomorrow be on the 50% penalty list and US taxpayers with foreign accounts in this bank would be forced to pay a much higher penalty.

Contact Sherayzen Law Office for Professional Tax Help With The Voluntary Disclosure of Your Foreign Accounts

The growing risk of higher OVDP penalty means that you should contact the experienced international tax team of Sherayzen Law Office. International tax attorney and Founder of Sherayzen Law Office, Mr. Eugene Sherayzen, will personally analyze your case, estimate your IRS penalty exposure, determine your offshore voluntary disclosure options, and implement your customized voluntary disclosure plan to resolve your US tax problems.

Same Interest Rates for the Fourth Quarter of 2014

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On September 3, 2014, the IRS announced that the underpayment and overpayment interest rates for the fourth quarter of 2014 will remain the same The rates will be:

three (3) percent for overpayments (two (2) percent in the case of a corporation);
three (3) percent for underpayments;
five (5) percent for large corporate underpayments; and
one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.  You can trace the interest rates for the fourth quarter of 2014 directly to this calculation.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points.  The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.  The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

It is important to note that the underpayment interest rates for the fourth quarter of 2014 will be used to determine the PFIC interest rate on the excess distribution for the fourth quarter of 2014.