Standard Mileage Rate
The simple method: track your business miles and multiply by the IRS rate (70 cents per mile for 2025 (72.5 cents for 2026)). This rate covers gas, oil, repairs, insurance, registration, and depreciation — you can't deduct those separately. You can still deduct parking fees and tolls on top of the mileage rate. To use this method, you must choose it in the first year you use the vehicle for business. Keep a mileage log with date, destination, business purpose, and miles driven.Actual Expense Method
Track every vehicle-related cost: gas, oil changes, repairs, tires, insurance, registration, lease payments or depreciation, car washes, even parking garage fees. Then multiply the total by your business-use percentage. If you drove 15,000 total miles and 10,000 were business, your business-use percentage is 66.7%. If total vehicle costs were $12,000, your deduction is $8,000.Comparison: Which Method Wins?
You drove 12,000 business miles out of 18,000 total (66.7% business use). Standard mileage: 12,000 x $0.70 = $8,400. Actual expenses: Gas $3,600, insurance $1,800, repairs $1,200, depreciation $4,000 = $10,600 total. Business portion: $10,600 x 66.7% = $7,070. In this case, standard mileage wins by $1,330. But if you had a more expensive vehicle or higher repair costs, actual expenses might win.
Rules and Restrictions
You can switch from standard mileage to actual expenses in later years, but switching back has restrictions (you must use straight-line depreciation for the remaining useful life). If you use 5+ vehicles simultaneously, you must use the actual expense method. Commuting miles (home to your regular workplace) are never deductible. Miles between two work locations, or from home if your home is your principal place of business, are deductible.
You can switch from standard mileage to actual expenses in later years, but switching back has restrictions (you must use straight-line depreciation for the remaining useful life). If you use 5+ vehicles simultaneously, you must use the actual expense method. Commuting miles (home to your regular workplace) are never deductible. Miles between two work locations, or from home if your home is your principal place of business, are deductible.
Track Mileage and Vehicle Costs
Hivebooks tracks both mileage and actual vehicle expenses, then calculates which method gives you the bigger deduction at tax time.
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