The Business Standard Mileage Rate Tax Deduction

The business standard mileage rate is a figure published annually by the Internal Revenue Service (IRS) to simplify deducting vehicle costs. For 2025, the rate is 70 cents per mile. This allows taxpayers to use a standardized amount for each business mile driven instead of tracking individual expenses like fuel and maintenance. This method applies to a car, van, pickup truck, or panel truck used for your business.

Eligibility for the Standard Mileage Rate

The standard mileage rate is available to self-employed individuals and independent contractors using a personal vehicle for business. However, certain rules can make a taxpayer ineligible. If you operate five or more cars simultaneously, as in a fleet operation, you must use the actual expense method instead.

Past tax claims on the vehicle also affect eligibility. You cannot use the standard mileage rate if you have claimed a depreciation deduction using any method other than straight-line. Claiming a Section 179 deduction or the special depreciation allowance on the vehicle also disqualifies it. For a leased vehicle, the deduction method chosen in the first year determines the method for the entire lease period, including renewals.

The Tax Cuts and Jobs Act of 2017 (TCJA) suspended the miscellaneous itemized deduction for unreimbursed employee travel expenses through 2025. This means most employees who use a personal car for work without reimbursement cannot deduct these expenses on their federal tax return. Exceptions exist for specific groups, including certain government officials and Armed Forces reservists.

Calculating Your Deduction

The standard mileage deduction requires accurately tracking “business miles,” which are miles driven for a specific business purpose. Examples include driving from your office to meet a client, traveling between work locations, or running business-related errands to the bank or post office.

It is important to distinguish between business travel and non-deductible commuting. The IRS defines commuting as travel between your home and your primary place of business, and these miles are never deductible. For example, the drive from your home to your office is a personal expense. If your home is your principal place of business, a trip from your home office to a client’s site is deductible.

To substantiate your deduction, the IRS requires detailed and contemporaneous records. A compliant mileage log must include the date of each trip, total miles driven, the destination, and the specific business purpose. It is also a best practice to record the vehicle’s starting and ending odometer readings for the year. Records can be kept in a physical logbook or with GPS-enabled smartphone apps.

The standard mileage rate covers most operating costs, including gasoline, routine maintenance, insurance, and depreciation. It does not cover all vehicle-related expenses. You can separately deduct other costs, such as business-related parking fees and tolls.

The Actual Expense Method Alternative

As an alternative, taxpayers can deduct the actual costs of operating their vehicle for business. This method requires tracking all vehicle-related expenses throughout the year. Qualifying expenses include:

• Gasoline, oil, and tires
• Repairs and maintenance
• Insurance premiums
• Vehicle registration fees
• Lease payments if you lease the vehicle

The actual expense calculation requires determining the business-use percentage of your vehicle. You must track both your total business miles and the total miles driven for the year. To find the business-use percentage, divide the business miles by the total miles, then multiply your total vehicle expenses by this percentage to find your deduction.

If you own the vehicle, you can also deduct a portion of its cost through depreciation. If you choose the actual expense method in the first year a car is used for business, you cannot switch to the standard mileage rate for that car in a later year. To preserve the option to switch between methods, you must use the standard mileage rate in the first year the car is used for business.

Claiming the Deduction on Your Tax Return

The form used to claim the deduction depends on your employment status. Self-employed individuals, freelancers, and independent contractors claim the deduction on Form 1040, Schedule C, “Profit or Loss from Business.” The total amount is entered on the line for car and truck expenses.

If you use the actual expense method and claim depreciation, you must also file Form 4562, “Depreciation and Amortization.” This form details the depreciation calculation and must be attached to your tax return. The information is then carried over to your Schedule C.

Certain employees still eligible to claim unreimbursed business mileage, such as qualified performing artists or Armed Forces reservists, report these expenses on Form 2106, “Employee Business Expenses.” The deduction is then reported on Schedule 1 of Form 1040.