What Qualifies as Business Mileage for a Tax Deduction?

Understanding what qualifies as deductible mileage is important for individuals and businesses managing vehicle expenses. Accurately identifying and tracking these miles can significantly impact financial outcomes and ensure compliance with tax regulations.

What Qualifies as Business Mileage

Business mileage refers to the distance driven for work-related activities. The Internal Revenue Service (IRS) defines business mileage as travel between two places of work, whether permanent or temporary. Examples include driving to a client’s office, traveling between company locations, making deliveries, attending business conferences, or picking up office supplies.

The IRS does not allow deductions for commuting mileage, which is travel from your home to your regular place of business. This rule applies even if you work during your commute or if your daily work location varies. An exception exists if your home is your primary place of business; in such cases, travel from your home office to other work locations for the same business may be deductible. Travel to a temporary worksite, expected to last one year or less, can also qualify as business mileage, even if it starts from your home.

Deducting Business Mileage

Tracking business mileage can lead to tax deductions for self-employed individuals and independent contractors. Employers may also use these guidelines to reimburse employees for business use of personal vehicles. There are two main methods for claiming vehicle expenses: the Standard Mileage Rate method and the Actual Expenses method.

The Standard Mileage Rate method multiplies your qualified business miles by a set rate published annually by the IRS. This rate covers the average costs of operating a vehicle, including fuel, maintenance, insurance, and depreciation. For 2025, the business standard mileage rate is 70 cents per mile.

The Actual Expenses method allows deduction of actual vehicle operating costs for business. This method requires itemizing specific expenses such as gas, oil, repairs, tires, insurance, registration fees, and depreciation or lease payments. The choice between these two methods depends on factors like total miles driven and actual vehicle operating costs.

Maintaining Proper Records

Accurate and detailed record-keeping is necessary to support any business mileage deduction. The IRS requires specific information for each business trip to prove the legitimacy of your expenses. This documentation should include the date, starting and ending locations, total mileage driven, and a clear business purpose. Avoid vague descriptions for the trip’s purpose.

Record your vehicle’s odometer readings at the beginning and end of each tax year. While not required for every trip, annual odometer readings are necessary to calculate total mileage. These records are important regardless of the deduction method chosen and should be kept for at least three years, or up to seven years, in case of an IRS audit.

Calculating Your Mileage Deduction

Once records are maintained, calculating your mileage deduction involves applying one of the two methods. For the Standard Mileage Rate method, simply multiply your total qualified business miles by the IRS-published rate for the relevant tax year. For example, if you drove 10,000 qualified business miles in 2025, multiplying 10,000 by $0.70 (the 2025 business rate) results in a $7,000 deduction.

If you opt for the Actual Expenses method, first total all your vehicle-related expenses for the year, such as fuel, oil changes, repairs, insurance premiums, vehicle registration fees, and depreciation. Next, determine the percentage of your total vehicle use that was for business by dividing your business miles by your total miles driven. This business-use percentage is then applied to your total vehicle expenses to calculate your deductible amount. For instance, if total vehicle expenses were $5,000 and 60% of mileage was for business, the deduction would be $3,000 ($5,000 x 0.60).