Can You Claim Gas and Mileage on Taxes?
Learn how to legitimately deduct vehicle expenses on your taxes. Understand the IRS rules for eligibility, calculation, and proper reporting to save money.
Understanding the specific rules and qualifications for deducting vehicle expenses is important for taxpayers. While certain vehicle expenses may be deductible, eligibility and the methods for claiming these deductions are subject to strict Internal Revenue Service (IRS) guidelines.
Who Can Claim Vehicle Expenses
Eligibility for claiming vehicle expenses on taxes depends largely on an individual’s employment status. Self-employed individuals, such as independent contractors or small business owners, can generally deduct vehicle expenses directly related to their business operations. These deductions are typically reported on Schedule C (Form 1040), Profit or Loss From Business.
The Tax Cuts and Jobs Act (TCJA) of 2017 suspended the deduction for unreimbursed employee business expenses from 2018 through 2025. This means that most employees who use their personal vehicle for work-related activities cannot deduct those expenses on their federal tax returns during this period. However, specific exceptions exist for armed forces reservists, qualified performing artists, and fee-basis state or local government officials.
Understanding Eligible Travel Categories
Vehicle expenses can be claimed for several distinct categories of travel, each with its own qualifying criteria. Business travel involves regular and necessary trips directly related to a trade or business. This encompasses driving to client meetings, temporary work locations, or for supply runs.
Medical travel allows for the deduction of expenses incurred primarily for obtaining medical care, including trips to doctors’ offices, hospitals, or pharmacies for prescribed medications. For charitable travel, vehicle expenses can be deducted when performing services for a qualified charitable organization, including transporting supplies or volunteering at events. Moving travel deductions are highly restricted and are generally limited to active-duty military personnel moving due to a permanent change of station.
Choosing Your Deduction Method
Taxpayers generally have two methods for calculating vehicle expense deductions: the standard mileage rate and the actual expense method. The standard mileage rate offers a simplified approach, allowing a set rate per mile driven for qualified purposes. The IRS annually publishes these rates, which for 2024 include 67 cents per business mile, 21 cents per medical or moving mile for qualified military personnel, and 14 cents per charitable mile. For 2025, the business rate increased to 70 cents per mile, while medical, moving (military), and charitable rates remain at 21 cents and 14 cents per mile, respectively.
Alternatively, the actual expense method permits deducting the actual costs of operating a vehicle for its deductible use. This method requires meticulous recordkeeping of all vehicle-related expenditures. Deductible actual expenses can include costs such as gas, oil, repairs, tires, insurance premiums, registration fees, and lease payments or depreciation. Parking fees and tolls incurred for the deductible purpose are also includable under both the standard mileage and actual expense methods. Choosing between these methods often depends on factors like the vehicle’s cost, total miles driven, and maintenance expenses.
Essential Recordkeeping
Maintaining accurate and contemporaneous records is imperative to substantiate vehicle expense claims. The IRS mandates detailed documentation to support any deduction taken. For each trip, records should include the date, mileage driven, destination, and the specific purpose of the trip.
If opting for the actual expense method, taxpayers must retain receipts for all related costs, such as fuel purchases, maintenance, repairs, and insurance payments. Without proper and organized records, the IRS may disallow the claimed deductions during an audit. Consistent and timely record-keeping is crucial for compliance.
How to Claim Your Deduction
Once all necessary information has been gathered and calculations completed, the final step involves reporting the deductions on the appropriate tax forms. Self-employed individuals typically report their vehicle expenses on Schedule C (Form 1040), Profit or Loss From Business. Within Schedule C, specific vehicle information is reported in Part IV, Information on Your Vehicle.
For individuals claiming medical or charitable mileage, these amounts are reported as itemized deductions on Schedule A (Form 1040), Itemized Deductions. Qualified moving expenses, which are limited to active-duty military personnel, are reported on Form 3903, Moving Expenses. Each of these forms serves as the specific conduit for taxpayers to formally declare their eligible vehicle-related deductions to the IRS.