Business Mileage Deduction: How to Track Miles and Write Off Vehicle Expenses

If you drive for your business, you can deduct the cost of that driving. The IRS gives you two ways to calculate it: the standard mileage rate, which multiplies your business miles by a set rate per mile, or the actual expense method, which deducts the business-use percentage of what the vehicle actually costs you to run. Either way, the deduction depends on a record of the miles you drove — and that is where most owners lose it.

Vehicle expenses are a routine audit target precisely because the deduction is large, common, and easy to estimate after the fact. The IRS requires you to substantiate business use with adequate records. A number reconstructed in April from memory is not a record, and examiners know what one looks like.

The 2026 rates — and the mid-year change most owners will miss

The IRS normally sets one standard mileage rate for the whole year. In 2026 it did not. Citing increases in the price of fuel, the IRS revised the rates effective July 1, 2026, which means a single tax year has two business rates.

If you use the standard mileage rate for 2026, you must split your mileage log at June 30. Miles driven through June 30 are deducted at 72.5 cents; miles driven July 1 and after are deducted at 76 cents. Applying one rate to the full year will misstate the deduction — and running the whole year at 72.5 cents quietly costs you 3.5 cents on every mile driven in the second half.

Method 1: the standard mileage rate

You multiply business miles by the rate. That is the entire calculation, which is why most owners with ordinary cars and trucks use it. The rate is designed to cover the full cost of operating the vehicle, so the following are already included and cannot be deducted separately:

• Gas and oil
• Repairs, maintenance, and tires
• Insurance
• Registration fees and licenses
• Depreciation, or lease payments

The trade-off is that the standard rate is an average. If you drive an expensive vehicle, a heavy truck, or a car with high insurance and repair costs, the average may be well below what the vehicle actually costs you.

Method 2: actual expenses

You total everything the vehicle costs for the year, then deduct the business-use percentage. If you drove 30,000 total miles and 21,000 were for business, your business-use percentage is 70%, and you deduct 70% of:

• Gas, oil, repairs, maintenance, and tires
• Insurance premiums
• Registration and license fees
• Lease payments, or depreciation if you own the vehicle
• Garage rent and car washes

Note that the actual expense method still requires a mileage log. You cannot compute a business-use percentage without knowing both business miles and total miles, so switching methods does not free you from tracking.

Which method gives the bigger deduction?

The general pattern: high miles on an inexpensive, reliable vehicle favors the standard rate, because you are being paid an average cost per mile for a vehicle that costs less than average to run. Low miles on an expensive vehicle, a large truck, or a vehicle with heavy repair and insurance costs favors actual expenses. The only way to know for your situation is to compute both, which requires keeping receipts and a mileage log in the first year so you have the option.

The first-year rule that locks you in

For a vehicle you own, you must choose the standard mileage rate in the first year the car is available for use in your business. Make that election, and in later years you can switch between standard mileage and actual expenses. Start with actual expenses in year one, and you cannot switch to the standard mileage rate for that vehicle later. For a leased vehicle the rule is stricter: if you use the standard mileage rate, you must use it for the entire lease period, including renewals.

One more restriction catches owners who bought a vehicle and wrote it off aggressively. If you claimed a Section 179 deduction, bonus depreciation, or MACRS depreciation on the vehicle, you generally cannot use the standard mileage rate for it afterward. Deciding how to depreciate a business vehicle is therefore also a decision about which mileage method you will be allowed to use for the rest of the vehicle's life.

Which trips count as business miles

Deductible business trips include driving to meet a client, to a job site, to pick up supplies or materials, to the bank or post office on business errands, to a temporary work location, and between two business locations. Trips between your home and a regular place of work are commuting, and commuting is never deductible — no matter how far it is, and no matter whether you take calls on the way.

The commuting rule is why a qualifying home office matters so much for owners who drive. When your home office is the principal place of business, the drive from home to your first job site is no longer a commute, because it is travel between two business locations. For many trades and mobile service businesses, that single change is worth more than the home office deduction itself.

What the IRS expects a mileage log to contain

For each business trip, record:

• The date of the trip
• The destination
• The business purpose — "client meeting, Riverside HVAC, quarterly review," not "business"
• The miles driven

You also need total miles driven for the year, which is why the simplest control is photographing your odometer on January 1 and December 31. Records should be kept at or near the time of the trip. Automatic tracking apps satisfy this well because they timestamp the trip as it happens and let you tag the purpose afterward; a notebook in the glovebox works just as well if it is actually filled in. What does not work is an annual estimate, a round number, or a log written the week the return is due.

Expenses you can deduct on top of either method

• Business parking fees and tolls — separately deductible whether you use standard mileage or actual expenses
• For the self-employed, the business-use portion of car loan interest and of personal property tax on the vehicle

Parking tickets and traffic fines are never deductible, and parking at your regular place of business is a commuting cost rather than a business expense.

At Stone Valley Accounting, we look at the vehicle deduction before a client buys or leases, not after. The first-year election, the depreciation choice, and whether a home office makes the first trip of the day deductible all interact, and all of them are far cheaper to get right in advance than to argue about later. For bookkeeping clients we track vehicle costs in their own accounts through the year, so both methods can be calculated at filing time and the larger one actually chosen.

Quick check: can you produce, right now, a log showing your business miles for the first half of 2026 separately from the second half? If not, start one today and photograph your odometer. A partial-year log kept properly is worth far more at audit than a full-year number nobody can support.