Car & Mileage Expenses — United States Tax Rules

Deduct business driving at the IRS Standard Mileage Rate ($0.70/mile for 2025) or claim actual vehicle expenses — keep a contemporaneous mileage log.

Claimable: Partially claimable · Tax authority: IRS (Internal Revenue Service)

IRS (Internal Revenue Service) Rules

• Two methods: (1) Standard Mileage Rate — $0.70/mile for 2025 (Jan 1–Dec 31). Multiply total business miles by $0.70. Simple; covers fuel, maintenance, and depreciation in one rate.
• (2) Actual Expense Method — deduct the business-use percentage of: gas, insurance, registration, repairs, depreciation (or Section 179), and lease payments. Can produce a higher deduction for heavy drivers with expensive vehicles.
• Commuting miles (home to your regular office) are never deductible. Business miles include: client visits, job sites, bank runs, and supply store trips.
• If you use the Standard Mileage Rate in Year 1, you may switch to Actual in later years. If you start with Actual, you cannot switch to Standard Mileage for the same vehicle.
• Keep a mileage log showing: date, destination, business purpose, and miles driven for each trip.
• Parking fees and tolls are deductible in addition to the standard mileage rate.
• Vehicles with a GVWR over 6,000 lbs (e.g. certain SUVs and trucks) may qualify for enhanced Section 179 deductions.

Limits

Standard mileage: $0.70/mile (2025). No annual dollar cap — limited only to documented business miles. Section 179 vehicle limits may apply for actual-expense vehicles.

Worked Example

Sofia, a freelance photographer, drove 12,000 business miles in 2025 to photoshoots, client meetings, and supply runs. Using Standard Mileage Rate: 12,000 × $0.70 = $8,400 deduction. She also paid $85 in tolls — bringing her total vehicle deduction to $8,485. She kept a daily mileage log in the MileIQ app throughout the year.

Record Keeping

• Maintain a contemporaneous mileage log — apps like MileIQ, TripLog, or Everlance auto-track trips
• Log: date, starting and ending odometer or total miles, destination address, and specific business purpose
• Keep your vehicle's total mileage figure for the year (odometer at Dec 31 minus Jan 1)
• Retain receipts for toll payments and parking fees claimed separately
• Record the date you first used the vehicle for business (determines which method is available)

Frequently Asked Questions

What is the 2025 IRS standard mileage rate?

The IRS standard mileage rate for 2025 is $0.70 per mile for business use. This rate is updated annually (sometimes mid-year) by the IRS and covers fuel, maintenance, and depreciation in one simplified rate.

Can I deduct mileage for driving from home to a client?

Yes — driving from your home (which is your place of business for self-employed individuals) to a client location is generally deductible as a business trip. However, if you have a regular office location, commuting from home to that office is not deductible.

Standard mileage vs actual expenses — which is better?

Standard mileage is simpler and often better for average vehicles with moderate fuel costs. Actual expenses can be better if you drive a fuel-efficient car with high depreciation, or a heavy SUV or truck with large Section 179 deductions. Run both calculations in your first year of business use to compare.