Examples of Deductible Transportation Expenses

Transportation expenses are the costs incurred when traveling for business or professional reasons. These are ordinary and necessary costs associated with getting from one work-related location to another. The deductibility of these costs depends on the nature of the travel, whether it is local or away from home overnight.

For self-employed individuals, these deductions can directly reduce their taxable income, while the rules for employees have changed significantly in recent years. Properly categorizing each trip is necessary to determine if it qualifies as a business expense. This involves understanding concepts like the daily commute, travel to temporary work locations, and trips to see clients or customers.

The Commuting Rule

The Internal Revenue Service (IRS) establishes a clear line between personal and business travel with the commuting rule. This regulation states that the costs of traveling between your home and your regular place of work are personal commuting expenses and, therefore, not deductible. This applies regardless of the distance traveled or if you perform work-related tasks, such as taking business calls, during the trip.

Examples of non-deductible commuting include driving your car from your suburban home to your office downtown each day or taking the subway from your apartment to your primary job site. Even if you have multiple regular work locations, the trip from your home to the first work location and the trip from the last work location back home are considered non-deductible commuting.

Deductible Local Transportation Examples

Many other forms of local travel qualify as business expenses. These are trips made for specific business purposes within your tax home’s general area. For a self-employed individual, these deductions are claimed on Schedule C (Form 1040). Under the Tax Cuts and Jobs Act of 2017, W-2 employees cannot deduct unreimbursed employee travel expenses from 2018 through 2025.

One common example of deductible local transportation is traveling between two different workplaces. If you have a main office and a second office or workshop, the cost of travel between them during the workday is deductible. Driving to visit a client at their office or a customer at their home is a business trip. The expense of traveling to a business meeting at a location other than your regular workplace, such as a conference center or restaurant, also qualifies.

Another exception to the commuting rule involves temporary work locations. If you travel from your home to a work location where your assignment is expected to last for one year or less, the travel is deductible. Running business-related errands, such as driving to a bank to make a business deposit or to an office supply store to pick up materials, also generates deductible transportation costs.

Business Travel Away From Home

When business requires you to be away from your tax home for a period longer than a normal workday, necessitating sleep or rest, the associated transportation costs are deductible. Your tax home is defined by the IRS as the entire city or general area of your main place of business, regardless of where your family home is located. These rules apply to the costs of getting to and from your business destination.

Deductible transportation expenses for travel away from home include the cost of airfare, train tickets, or bus fare to another city for a business conference or meeting. Once at the destination, the cost of a rental car used for business purposes is also deductible. Other qualifying expenses include taxi or rideshare fares for transportation between the airport and your hotel, or from your hotel to a client’s office.

Calculating Vehicle Expenses

When you use your personal vehicle for deductible business transportation, you have two methods to calculate the expense: the standard mileage rate and the actual expense method. A taxpayer must choose one method in the first year the car is used for business, which can impact choices in later years. If you choose the standard mileage rate the first year, you can often switch to the actual expense method in a subsequent year. If you use the standard mileage rate for a leased vehicle, you must stick with that method for the entire lease period. If you initially choose the actual expense method, you cannot switch to the standard mileage rate for that same vehicle.

The standard mileage rate is a simplified option where you deduct a set amount for each business mile driven. For 2025, the rate is 70 cents per mile. This rate accounts for the costs of gasoline, maintenance, and depreciation. In addition to the standard rate, you can also deduct business-related parking fees and tolls.

The actual expense method involves tracking all the real costs of operating your car for the year. This includes expenses like gas, oil, repairs, tires, insurance, registration fees, and depreciation. You then calculate the percentage of your total annual mileage that was for business use and apply that percentage to your total costs to find your deduction amount. For example, if 75% of your driving was for business, you can deduct 75% of your total vehicle operating costs.

Required Recordkeeping

To claim any vehicle-related transportation deduction, you must maintain thorough and contemporaneous records. The IRS requires detailed documentation to substantiate your claims. Contemporaneous means the records are created at or near the time of the trip. Keeping a logbook, a spreadsheet, or a mileage-tracking app are all acceptable methods.

For every business trip, your mileage log must include the date, the starting and ending locations, the total miles driven, and the specific business purpose of the trip. For example, a log entry might read: “March 5, 10 miles, visited Client XYZ to discuss project proposal.”

In addition to a mileage log, you must keep receipts for all other transportation expenses you intend to deduct. This includes receipts for airfare, train tickets, rental cars, taxis, tolls, and parking fees. Without adequate records, the IRS can disallow your deductions.