How Can I Write Off My Car for Business?

Self-employed individuals and business owners can deduct the costs of using a vehicle for business. The Internal Revenue Service (IRS) provides two methods for calculating this deduction: the standard mileage rate and the actual expense method.

Determining Business Use of Your Vehicle

To deduct vehicle expenses, you must distinguish between business, commuting, and personal use. Business use includes travel between two different business locations, such as your main office and a client’s office, or travel to meet with clients. Driving to a temporary work location outside of your regular metropolitan area is also considered business use.

Commuting mileage, which is travel between your home and your main place of work, is not deductible. This travel is a personal expense even if you make business calls during the trip. Any other driving not for business, such as running errands or going on vacation, is considered personal use.

The allocation between these categories is based on the miles driven for each purpose. If your home office qualifies as your principal place of business, driving from your home to meet a client is deductible business travel. However, driving from your house to a separate office is a non-deductible commute.

Methods for Calculating Your Deduction

You must choose one of two methods to calculate your deduction: the standard mileage rate or the actual expense method. The method you select in the first year you use your car for business can affect which method you can use in subsequent years. If you choose the standard mileage rate the first year, you can switch to the actual expense method later. If you first choose the actual expense method, you cannot switch to the standard mileage rate for that same vehicle. For a leased vehicle, you must use the standard mileage rate for the entire lease period if you choose it initially.

Standard Mileage Rate

The standard mileage rate is a simplified method for calculating your vehicle deduction. The IRS sets a specific rate per mile for business use, which for 2025 is 70 cents per mile. To calculate your deduction, you multiply your total business miles by the rate. For instance, if you drove 10,000 business miles in 2025, your deduction would be $7,000.

This rate accounts for variable costs like gas and maintenance, and fixed costs like depreciation and insurance, so you cannot deduct these items separately. You can, however, still deduct the business portion of interest on a car loan, parking fees, and tolls. The portion of the standard rate treated as depreciation, which is 33 cents per mile for 2025, reduces your vehicle’s tax basis.

Actual Expense Method

The actual expense method involves tracking and deducting the actual costs of operating your vehicle for business. This method can result in a larger deduction if you have high operating costs. You must calculate the percentage of your car’s use for business by dividing your total business miles by the total miles the car was driven during the year.

You can deduct the business-use percentage of many vehicle expenses, including:

• Gasoline
• Oil changes
• Tires
• Insurance premiums
• Registration fees
• Repairs and maintenance

For example, if your total vehicle expenses were $8,000 and you used your car for business 75% of the time, you could deduct $6,000.

A component of this method is the depreciation deduction, which allows you to recover the cost of your vehicle over time. Cars are typically depreciated using the Modified Accelerated Cost Recovery System (MACRS) over a five-year period. You may also be able to take a Section 179 deduction or bonus depreciation. For property placed in service in 2025, the bonus depreciation rate is 40%. These rules are often more advantageous for heavy vehicles, like trucks and SUVs with a gross vehicle weight rating over 6,000 pounds.

Essential Recordkeeping for Vehicle Expenses

The IRS requires you to maintain thorough and contemporaneous records to substantiate your vehicle deductions, regardless of the method used. Contemporaneous means records must be made at or near the time of the travel or expense. A log created from memory at the end of the year is not sufficient.

For every business trip, your mileage log must document:

• The date of the trip
• Your starting and ending points
• The business purpose of your travel
• The starting and ending odometer readings for the trip

While a paper logbook is acceptable, many taxpayers use GPS-based smartphone applications to simplify the process.

If you use the actual expense method, you must also keep detailed records of every cost associated with your vehicle. This means retaining all receipts and invoices for expenses like fuel, oil changes, insurance, and repairs. At the end of the year, you will need your total mileage for business, commuting, and personal use to calculate your business use percentage.

Reporting Vehicle Deductions on Your Tax Return

You must report your vehicle deduction on the correct tax forms. For most sole proprietors, this process involves IRS Form 4562, Depreciation and Amortization. You must complete Part V of this form if you are claiming any vehicle expenses, regardless of the method used. This section requires information such as the date the vehicle was placed in service, total miles driven, and the breakdown of business, commuting, and personal miles.

If you use the standard mileage rate, you will calculate your deduction directly on this part of the form. If you use the actual expense method, you will also use Form 4562 to calculate depreciation. The total vehicle deduction from Form 4562 is then carried over to your main business tax form, which for self-employed individuals is Schedule C (Form 1040). The deduction is entered on line 9 of Schedule C, with the depreciation portion reported separately on line 13.