Mileage Deduction FAQ

For 2024, the IRS has set the following standard mileage rates:

• Business use: 67 cents per mile (up from 65.5 cents in 2023)
• Medical purposes: 21 cents per mile
• Moving (active-duty military only): 21 cents per mile
• Charitable service: 14 cents per mile (set by statute, rarely changes)

The business mileage rate is set annually by the IRS based on a comprehensive study of fixed and variable costs of operating a vehicle. The rate covers all operating expenses including:

• Depreciation (or lease payments)
• Gasoline and oil
• Insurance
• Maintenance and repairs
• Tires
• Registration and license fees

When you use the standard mileage rate, you cannot separately deduct these expenses - they're built into the rate. However, you can add parking fees and tolls to your standard mileage deduction since these aren't included in the rate.

Who can claim the deduction:

• Self-employed individuals report business mileage on Schedule C
• Partners deduct as unreimbursed partnership expenses
• Most W-2 employees cannot deduct mileage under current law (2018-2025 TCJA suspension)
• Exceptions: Armed Forces reservists, qualified performing artists, fee-based state/local officials

Use our mileage deduction calculator to estimate your annual deduction based on your business miles.

The IRS allows two methods for calculating vehicle deductions under IRC Section 162, and choosing the right one can significantly impact your tax savings.

Standard Mileage Rate Method:

• Multiply your business miles by the IRS rate (67 cents for 2024)
• Example: 15,000 business miles x $0.67 = $10,050 deduction
• Add parking fees and tolls separately (not included in rate)
• Simple to calculate with minimal recordkeeping
• Includes a built-in depreciation component (29 cents per mile for 2024)

Actual Expense Method:

• Track all vehicle operating costs for the year
• Calculate your business-use percentage (business miles / total miles)
• Deduct that percentage of total expenses

Deductible actual expenses include:

• Gasoline and oil
• Insurance premiums
• Repairs and maintenance
• Tires
• Registration and licensing fees
• Depreciation (or lease payments)
• Car loan interest (if used for business)
• Car wash and detailing
• Parking and tolls (100% if business-related)

Example comparison:

You drove 20,000 miles total, 15,000 for business (75% business use). Total vehicle expenses: $12,000.

• Standard method: 15,000 x $0.67 = $10,050
• Actual method: $12,000 x 75% = $9,000

In this case, the standard method wins. However, for expensive vehicles with high operating costs, actual expenses often produce larger deductions.

The IRS has strict substantiation requirements for vehicle expenses under IRC Section 274(d). Without proper documentation, your entire mileage deduction can be disallowed - the IRS does not accept estimates or reconstructed records.

Required documentation for each trip:

1. Date: The date of each business trip
2. Destination: Where you drove (address or general location)
3. Business purpose: Why the trip was business-related (e.g., "client meeting with ABC Corp," "supplies purchase at Office Depot")
4. Miles driven: Starting and ending odometer readings, or total miles for the trip

Additional records to maintain:

• Beginning-of-year odometer reading (January 1 or when you started using the vehicle for business)
• End-of-year odometer reading (December 31)
• Total annual miles driven
• Total business miles for the year
• If using actual expenses: receipts for gas, repairs, insurance, and other costs

Acceptable record formats:

• Paper mileage log: Traditional written log with required information
• Spreadsheet: Excel or Google Sheets tracking trips
• Mileage tracking apps: MileIQ, Stride, Everlance, TripLog - these automatically record GPS data and can categorize trips as business or personal
• Calendar entries: If they contain required details (date, destination, purpose, miles)

Key requirements:

• Records must be contemporaneous - created at or near the time of each trip, not reconstructed later
• Keep records for at least 3 years after filing (6 years if income underreported by 25%+)
• Back up digital records regularly

Understanding which miles qualify as "business" is essential for maximizing your deduction while staying compliant with IRS rules under IRC Section 162.

Deductible business mileage includes:

• Client/customer visits: Driving to meet clients at their location
• Between work locations: Travel from one business location to another
• Business errands: Trips to the bank, post office, or office supply store for business purposes
• Professional development: Travel to conferences, seminars, continuing education, or business meetings
• Property management: Driving to rental properties you own for inspections, repairs, or tenant meetings
• Job site travel: For construction, real estate, or other mobile professions, travel between job sites
• Airport travel: Driving to/from the airport for business trips

Special rule for home office:

If you have a qualifying home office (meeting regular and exclusive use requirements), your home becomes your principal place of business. This has important implications:

• Trips from your home office to client locations are 100% business miles
• Trips from home to temporary work locations are business miles
• Without a home office, the first and last trips of the day are typically non-deductible commuting

NOT deductible (personal mileage):

• Commuting: Daily travel between home and your regular workplace
• Personal errands: Even if you stop briefly to check email or make a business call
• Meal runs: Driving to get lunch during the workday
• Mixed trips: The personal portion of trips with both business and personal purposes (allocate appropriately)

The ability to switch between methods depends on which method you used in the first year you placed the vehicle in service for business. This is a critical decision with long-term consequences.

If you start with the STANDARD mileage rate:

• You CAN switch to actual expenses in any later year
• If you switch, you must use straight-line depreciation for the vehicle's remaining useful life
• You can switch back to standard mileage in future years
• This flexibility makes starting with the standard rate advantageous

If you start with ACTUAL expenses:

• You generally CANNOT switch to the standard mileage rate for that vehicle ever
• You're locked into actual expenses for the life of that vehicle
• Exception: If you use straight-line depreciation (not MACRS) and don't claim Section 179, you may be able to switch

Additional restrictions on standard mileage rate:

• Five-vehicle rule: Cannot use for fleets of more than five vehicles used simultaneously
• Ownership requirement: You must own or lease the vehicle (corporations and certain entities cannot use standard rate)
• No prior accelerated depreciation: Cannot use if you've claimed MACRS depreciation or Section 179 on the vehicle
• No special depreciation allowance: Cannot use if you've claimed bonus depreciation

For leased vehicles:

• If you choose the standard mileage rate, you must use it for the entire lease period (including renewals)
• This includes any renewals or extensions of the lease

Best practice: Use the standard mileage rate in the first year to preserve flexibility, then evaluate annually which method provides the larger deduction.

No. Daily commuting between your home and your regular place of work is a personal expense under IRC Section 262 and is never deductible, regardless of:

• How far you commute
• Whether you make business calls while driving
• Whether you're required to use your personal vehicle for work
• Whether you transport work materials or equipment
• Whether your employer requires it

The IRS considers commuting a personal expense because you choose where to live relative to your workplace. This rule applies equally to employees and self-employed individuals with a regular office location.

Important exceptions to the commuting rule:

1. Home office exception: If you have a qualifying home office (meeting IRS regular and exclusive use requirements), your home becomes your principal place of business. Trips from your home office to other business locations are deductible business miles, not commuting.
2. No regular workplace: If you work at different locations every day with no fixed office (like a traveling salesperson or construction worker), trips from home to your first customer and from your last customer to home may be deductible.
3. Temporary work locations: Travel to a work location outside your metropolitan area, or to a location expected to last less than one year, is deductible from home.
4. Second job travel: After working at your primary job, driving directly to a second job is deductible. Driving home from the second job is commuting (not deductible).
5. Transporting heavy tools: If you must transport heavy tools or equipment in your vehicle that cannot reasonably be transported by public transit, additional commuting costs may be deductible (but not the basic commute).

Rideshare drivers are classified as self-employed independent contractors (not employees), which means you can deduct business vehicle expenses on Schedule C of your personal tax return.

What counts as business miles for rideshare:

• Period 2: Miles driven to pick up passengers after accepting a ride request
• Period 3: Miles driven with passengers in the vehicle
• Between-ride miles: Miles driven between rides while the app is on and you're available ("deadhead" miles)

Generally NOT deductible:

• Period 1: Miles driving from home to your first pickup zone (commuting)
• End of day: Miles driving home after your last ride (commuting)
• Exception: If you have a qualifying home office, these may be deductible

Standard mileage vs. actual expenses:

Most rideshare drivers find the standard mileage rate (67 cents per mile for 2024) more advantageous because:

• High mileage means large deductions
• The built-in depreciation component is generous given typical vehicle ages
• Simpler recordkeeping than tracking every expense

Essential tracking tips:

• Use a mileage tracking app (Stride, Everlance, MileIQ, Hurdlr) that auto-detects trips
• Your rideshare platform's mileage report typically only shows "on-trip" miles - you need to track between-ride miles yourself
• Record your odometer at the start and end of each day/shift
• Keep your rideshare platform's annual tax summary (shows on-trip miles and earnings)

Other deductible expenses:

In addition to mileage, rideshare drivers can deduct: phone bills (business portion), phone mounts and chargers, service fees, supplies (water, tissues, mints for passengers), and car washes.

Your ability to deduct vehicle expenses depends on your ownership or lease arrangement. The rules differ based on whether you own, lease, borrow, or use an employer-provided vehicle.

Leased vehicles:

• You CAN use either the standard mileage rate or actual expenses
• If you choose the standard mileage rate, you must use it for the entire lease period (including renewals)
• If you choose actual expenses, lease payments are deductible expenses (business portion)
• Actual expense method for leased vehicles may require a "lease inclusion" adjustment that reduces your deduction for expensive vehicles

Borrowed vehicles (friend's or family member's car):

• You CANNOT use the standard mileage rate - it's only for vehicles you own or lease
• You CAN deduct your actual out-of-pocket expenses (gas you paid for, parking, tolls)
• You cannot deduct depreciation, insurance, or other costs paid by the vehicle owner

Company-owned vehicles:

• The vehicle deduction belongs to the company, not the individual driver
• If you're a sole proprietor or single-member LLC, you can deduct on Schedule C
• If it's a corporation's vehicle, the corporation takes the deduction on its return
• Employees using company vehicles have no personal deduction (the company gets it)

Employer reimbursements:

• If your employer reimburses mileage under an accountable plan at or below the IRS rate, the reimbursement is tax-free and you take no deduction
• If reimbursed under a non-accountable plan (shown on W-2 as wages), you could potentially deduct if you're in an eligible employee category
• If reimbursed above the IRS rate, the excess is taxable income