Navigating New Mileage Rates, Tax Bracket Changes, and More for Relocation
With the new year comes new caps, tax tables and allowances from the U.S. Internal Revenue Service (IRS). Listed below are the areas related to relocation for tax year 2024.
Standard Mileage Rate
The IRS announced an increase of the optional standard mileage rates for 2024. The standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 67 cents per mile driven for business use, an increase of 1.5 cents from 2023.
- 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.
Most companies follow the IRS guidelines to calculate the mileage reimbursements for final move expenses when driving to the new location. This rate increase will affect mobility programs:
- If you are an NEI client who has elected to follow IRS guidelines for your expense administration, nothing is needed at this time. NEI will incorporate the mileage change into your expense reimbursement policy, as agreed.
- If you are an NEI client who has not elected to follow the government established mileage rates in the past, NEI will continue to follow your prescribed rates unless you advise us that your company is changing the rate. Please contact your NEI Client Relations Manager directly, if you would like to confirm or update your current rate.
IRS Federal Income Tax Brackets and Rates
The IRS has also announced new 2024 tax year tax brackets, for taxes one will file in April 2025.
- The IRS has adjusted the brackets for 2024 based on inflation, which is considered annually.
- One’s tax bracket depends on one’s taxable income and filing status: single, married filing jointly or qualifying widow(er), married filing separately and head of household.
Standard Deductions
Standard deduction amounts have also increased:
Social Security Wage Limit
The Federal Insurance Contributions Act (FICA) requires companies to withhold three separate taxes from the wages paid to employees. The largest tax of these three is the Social Security, also known as the Old Age, Survivors and Disability Insurance Program (OASDI).
For 2024, the FICA tax rate for both employers and employees is 7.65% (6.2% for OASDI and 1.45% for Medicare) to be paid on the first $168,600 of wages in 2024. This is up from $160,200 in 2023.
$10,453 is the maximum amount of Social Security tax that will be deducted from an employee’s paycheck in 2024. This is an increase from $9,932 in 2023.
Supplemental Tax Withholding Rates
As standard for previous years, the supplemental Federal rate is 22% for those who make under $1 million remains unchanged, as does the 37% supplemental rate for those who exceed $1 million.
In Summary
As your relocation partner, NEI is here to explain year-end tax questions for your relocating employees. If you have any question about these changes, please contact Jaymi Stacy, NEI’s Sr. Director of Expense Disbursements, or your NEI Client Relations Manager at 800.533.7353.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.
Navigating New Mileage Rates, Tax Bracket Changes, and More for Relocation
With the new year comes new caps, tax tables and allowances from the U.S. Internal Revenue Service (IRS). Listed below are the areas related to relocation for tax year 2024.
Standard Mileage Rate
The IRS announced an increase of the optional standard mileage rates for 2024. The standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 67 cents per mile driven for business use, an increase of 1.5 cents from 2023.
- 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023.
- 14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.
Most companies follow the IRS guidelines to calculate the mileage reimbursements for final move expenses when driving to the new location. This rate increase will affect mobility programs:
- If you are an NEI client who has elected to follow IRS guidelines for your expense administration, nothing is needed at this time. NEI will incorporate the mileage change into your expense reimbursement policy, as agreed.
- If you are an NEI client who has not elected to follow the government established mileage rates in the past, NEI will continue to follow your prescribed rates unless you advise us that your company is changing the rate. Please contact your NEI Client Relations Manager directly, if you would like to confirm or update your current rate.
IRS Federal Income Tax Brackets and Rates
The IRS has also announced new 2024 tax year tax brackets, for taxes one will file in April 2025.
- The IRS has adjusted the brackets for 2024 based on inflation, which is considered annually.
- One’s tax bracket depends on one’s taxable income and filing status: single, married filing jointly or qualifying widow(er), married filing separately and head of household.
Standard Deductions
Standard deduction amounts have also increased:
Social Security Wage Limit
The Federal Insurance Contributions Act (FICA) requires companies to withhold three separate taxes from the wages paid to employees. The largest tax of these three is the Social Security, also known as the Old Age, Survivors and Disability Insurance Program (OASDI).
For 2024, the FICA tax rate for both employers and employees is 7.65% (6.2% for OASDI and 1.45% for Medicare) to be paid on the first $168,600 of wages in 2024. This is up from $160,200 in 2023.
$10,453 is the maximum amount of Social Security tax that will be deducted from an employee’s paycheck in 2024. This is an increase from $9,932 in 2023.
Supplemental Tax Withholding Rates
As standard for previous years, the supplemental Federal rate is 22% for those who make under $1 million remains unchanged, as does the 37% supplemental rate for those who exceed $1 million.
In Summary
As your relocation partner, NEI is here to explain year-end tax questions for your relocating employees. If you have any question about these changes, please contact Jaymi Stacy, NEI’s Sr. Director of Expense Disbursements, or your NEI Client Relations Manager at 800.533.7353.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.
