Business owners who drive to customers, suppliers, or eligible business meetings may be able to deduct vehicle expenses. The key is to distinguish qualifying business miles from personal trips and commuting.
1. Which trips count?
Driving between business locations, meeting customers, buying business materials, and visiting qualifying temporary worksites may count. Ordinary commuting from home to a regular workplace generally does not.
2. Method A: Standard mileage
For 2026, the IRS mileage rate changed midyear:
| Dates | Business mileage rate |
|---|---|
| January 1–June 30, 2026 | 72.5¢ per mile |
| July 1–December 31, 2026 | 76¢ per mile |
Example: 5,000 qualifying business miles in each half of the year:
5,000 × $0.725 + 5,000 × $0.76 = $7,425.
The rate generally incorporates gas, maintenance, insurance, and depreciation. Eligible business parking and tolls can generally be added separately; other limited items may also be separately deductible under special rules.
3. Method B: Actual expenses
Track eligible gas, maintenance, insurance, repairs, registration, and allowable depreciation or lease payments. Calculate the business-use percentage from documented business miles divided by total miles.
Example: 10,000 business miles / 20,000 total miles = 50% business use. If eligible operating expenses plus allowable depreciation total $14,000, the preliminary business deduction is $7,000.
| Method | Illustrated deduction |
|---|---|
| Standard mileage | $7,425 |
| Actual expenses | $7,000 |
| Difference | $425 |
These examples assume both methods are legally available and all shown expenses qualify. The larger one-year deduction is not always the best lifetime choice.
4. Can I switch methods?
Sometimes. Using standard mileage in the first year a personally owned car is available for business generally preserves some ability to switch in later years. Certain accelerated depreciation or Section 179 choices can eliminate that option. Special rules apply to leased vehicles. A personally titled vehicle may still qualify for a sole proprietor or eligible disregarded LLC; S-corporation owner-employees generally need proper reimbursement procedures.
5. Common mistakes and misunderstandings
- “I deduct standard mileage and all my gas too.” Generally a double deduction.
- “Every mile I drive for my job counts.” Commuting and personal trips generally don't.
- “I bought a $60,000 vehicle and can deduct all $60,000 immediately.” Depreciation, vehicle type, business use, and dollar limits matter.
- “My LLC owns the car, so 100% of it is deductible.” Personal use must still be accounted for.
- “Gas receipts are enough to prove business mileage.” Mileage and trip purposes must be documented.
- “I can always change methods next year.” Earlier choices may restrict the options.
6. Before meeting your tax preparer
Bring a mileage log listing date, destination, purpose, and business miles, opening and closing odometer readings or other reliable total-mile support, relevant vehicle costs, parking/tolls, and purchase or lease documents. Do not calculate the final deduction in the worksheet—record the facts and let the preparer evaluate the method.
Official references: IRS standard mileage rates · Publication 463.