What Counts as Business Mileage for Self-Employed?

Self-employed individuals can deduct vehicle expenses incurred for business activities, which can significantly reduce their taxable income. Properly identifying and documenting these miles is necessary to comply with tax regulations and realize potential savings. This guide clarifies what qualifies as business mileage.

Defining Qualified Business Mileage

Mileage qualifies as a business expense when it is “ordinary and necessary” and “directly related to your trade or business.” An ordinary expense is common and accepted in your industry. A necessary expense is helpful and appropriate for your business; it does not have to be required.

The Internal Revenue Service (IRS) outlines these criteria in its guidance, such as Publication 463. This means the mileage must be incurred while performing duties specific to your self-employment, such as meeting clients, traveling between business locations, or picking up supplies. If you use your vehicle for both business and personal purposes, you must divide your expenses accordingly. For example, if 60% of your total mileage is for business, then 60% of your vehicle expenses can be considered for deduction.

The IRS allows for two main methods to calculate car expenses: the standard mileage rate or actual expenses. The standard mileage rate, updated annually, covers costs like gas, oil, maintenance, insurance, and depreciation. For 2024, the standard business mileage rate is 67 cents per mile, increasing to 70 cents per mile for 2025. If you use the standard mileage rate, you cannot deduct actual car expenses like depreciation or lease payments.

Common Business Travel Scenarios

Travel between different business locations, if you have more than one, is deductible. For instance, if you operate out of a main office but also have a workshop or a second business site, the mileage driven between these locations counts. This applies whether the locations are permanent or temporary.

Driving to meet clients or customers is a frequent scenario that qualifies. This includes trips to their offices, homes, or other meeting places, as these are directly related to generating business income. Similarly, mileage incurred to pick up supplies, equipment, or inventory essential for your business operations is deductible. For example, a trip to a wholesale supplier or a hardware store for business-related items would qualify.

Attending business-related conferences, seminars, or trade shows also generates deductible mileage. These events are considered beneficial for professional development and networking within your industry. If your home office qualifies as your principal place of business, travel from your home office to other business locations or client sites is deductible. This includes trips to a temporary workplace if you expect to work there for less than one year.

Mileage That Does Not Qualify

Personal commuting, which is the travel between your home and a fixed business location, is not considered business mileage. This applies even if you work a significant distance from your home; the IRS views this as a personal expense.

Mileage incurred for personal errands, vacations, or other non-business-related travel also does not qualify. Even if a trip has a minor business component, the primary purpose of the trip must be business-related for the mileage to be deductible. For example, if you combine a business meeting with a personal vacation, only the mileage directly attributable to the business portion of the trip is deductible. Driving to pick up a relative during a business trip, for instance, would require subtracting that personal portion of the mileage.

Transportation costs for hauling tools or displaying advertisements on your vehicle are not considered deductible business mileage on their own. The mileage must serve a clear, direct, and non-personal business function.

Documenting Your Business Mileage

Accurate and timely record-keeping is necessary to substantiate business mileage claims. The IRS requires detailed records for each business trip. This documentation should include the date of the trip, the destination, the business purpose, and the total miles driven. It is also advisable to record the starting and ending odometer readings for the year.

These records should be maintained contemporaneously, meaning at or near the time of the trip. While daily logging is ideal, weekly updates are considered sufficient. You can choose from various methods for tracking mileage, such as a manual logbook, a spreadsheet, or specialized mileage tracking applications. Digital formats are accepted by the IRS.

Beyond mileage, it is important to keep supporting documentation for other related expenses, such as receipts for tolls and parking fees. These costs are deductible in addition to the standard mileage rate. Thorough documentation ensures compliance with IRS regulations and helps to support your deductions in the event of an audit. Records should be kept for at least three years from the date you file your tax return.