Can You Write Off Tolls for Work on Your Taxes?

Many individuals wonder if tolls incurred for work-related travel are tax deductible. Understanding the rules and requirements for these deductions is important for accurate tax filing. Eligibility depends on employment status and the nature of the travel.

Eligibility for Deducting Work Tolls

The ability to deduct work-related tolls depends on whether an individual is self-employed or a W-2 employee. Self-employed individuals, such as sole proprietors or independent contractors, can deduct ordinary and necessary business expenses incurred in their trade or business, including tolls for business travel.

However, the Tax Cuts and Jobs Act (TCJA) of 2017 suspended the deduction for unreimbursed employee business expenses, including tolls, from tax years 2018 through 2025. This means most W-2 employees cannot deduct tolls for federal tax purposes, even if their employer does not reimburse them.

IRS Publication 529 clarifies that unreimbursed employee expenses are no longer deductible for most taxpayers. While certain armed forces reservists, qualified performing artists, or fee-basis state or local government officials may still deduct these expenses through 2025, the general rule is that W-2 employees cannot. This suspension is set to expire after tax year 2025, but Congress could amend or extend this provision.

Qualifying Business Travel Tolls

For those eligible to deduct tolls, primarily self-employed individuals, it is important to understand which travel scenarios qualify. Deductible tolls must be considered “ordinary and necessary” business expenses. An ordinary expense is common and accepted in the industry, while a necessary expense is helpful and appropriate for the business. The expense does not have to be indispensable to be considered necessary.

Tolls incurred for commuting between a taxpayer’s home and their regular place of business are generally not deductible. The IRS considers commuting a personal expense. However, tolls paid during business travel, such as trips to client sites, temporary work locations, or business meetings, are typically deductible.

Examples of deductible tolls include those paid on roads, bridges, or tunnels while traveling for business purposes. This also extends to tolls incurred when using a personal vehicle for business or when renting a car for business travel. The travel must have a clear business purpose and be directly related to generating income or profits for the business.

Record Keeping for Toll Deductions

Accurate and complete record-keeping is essential for substantiating any business expense, including tolls, claimed on a tax return. Taxpayers must maintain detailed records to support their deductions in case of an IRS inquiry. This documentation should clearly demonstrate the business purpose of the travel and the amount spent on tolls.

Maintaining physical or digital receipts for toll payments is a primary method of documentation. This can include receipts from toll booths, electronic toll transponder statements, or credit card statements that clearly show the toll charges. A detailed log should also be kept, recording information such as the date of travel, the amount of the toll, the specific destination, and the business purpose of the trip.

For toll transponders, regularly reviewing and saving statements can provide a comprehensive record of all tolls paid. These statements often include dates, times, and amounts, which can be cross-referenced with a travel log to ensure accuracy. The combination of receipts or statements with a well-maintained log provides strong evidence to support the claimed toll deductions.

Reporting Deductible Tolls on Your Tax Return

Self-employed individuals eligible to deduct work-related tolls report these expenses on Schedule C (Form 1040), Profit or Loss From Business. This form is used to report income and expenses from a business operated as a sole proprietorship. Tolls are included as part of “Car and truck expenses” on Schedule C.

When reporting car and truck expenses, taxpayers can choose to deduct either the actual expenses of operating the vehicle or use the standard mileage rate. If the standard mileage rate is chosen, business-related tolls and parking fees can still be deducted separately. If actual expenses are used, tolls are included in the overall calculation of vehicle operating costs.