Business Vehicle & Mileage Deductions

Business vehicle deductions allow you to write off the cost of using your car, truck, or van for business purposes using either the standard mileage rate (67 cents per mile for 2024, 70 cents per mile for 2025) or the actual expense method tracking gas, insurance, repairs, and depreciation. You cannot deduct commuting miles — only trips between business locations, to clients, or for business errands. Tax Sherpa recommends comparing both methods annually, as the better option changes depending on your vehicle costs and mileage volume.

Key Takeaways

• Two methods: Standard mileage rate (67¢/mile for 2024) or Actual expenses (gas, insurance, repairs, depreciation × business %)
• Commuting is never deductible — driving from home to your regular workplace doesn't count
• You must choose standard mileage in the first year you use a vehicle for business to preserve that option
• Parking fees and tolls are deductible in addition to either method
• A mileage log is required — the IRS wants date, destination, business purpose, and miles for each trip

Standard Mileage Rate vs. Actual Expenses

Example: 12,000 business miles in a year

• Standard mileage: 12,000 × $0.67 = $8,040
• Actual expenses: $6,000 gas + $1,800 insurance + $2,000 repairs + $3,000 depreciation = $12,800 total × 60% business use = $7,680

In this case, standard mileage wins. But if your vehicle has higher costs or lower business-use percentage, actual expenses might be better.

What Miles Are Deductible?

Pro tip: If you have a qualifying home office, every trip from home for business is deductible — because your home IS your business location. This can add thousands in deductible miles.

Record-Keeping Requirements

The IRS requires a contemporaneous mileage log with:

1. Date of each trip
2. Destination (where you went)
3. Business purpose (why the trip was for business)
4. Miles driven (odometer readings or GPS tracking)

Tools that make this easy: MileIQ, Everlance, Driversnote, or even a simple spreadsheet. The key is logging trips when they happen — not reconstructing at year-end.

Section 179 and Vehicle Depreciation

If you purchase a vehicle for business use, you may be able to deduct a significant portion (or all) of the cost in the first year:

• Section 179: Deduct the full purchase price of qualifying vehicles (up to $1,220,000 total Section 179 in 2024)
• SUV limitation: Vehicles over 6,000 lbs GVWR have a $30,500 Section 179 cap (2024)
• Heavy vehicles (over 6,000 lbs GVWR): Can deduct up to $30,500 Section 179 + 60% bonus depreciation on remainder
• Passenger vehicles under 6,000 lbs: Limited to $20,400 first-year depreciation (2024)

Frequently Asked Questions

Can I deduct mileage if I don't have an LLC?

Yes. Vehicle deductions are based on business use, not entity type. Sole proprietors claim vehicle expenses on Schedule C just like any other business entity.

Can I deduct both mileage and actual expenses?

No. You must choose one method per vehicle per year. However, parking and tolls are deductible regardless of which method you choose.

What if I use my car for both personal and business?

You only deduct the business portion. If 60% of your miles are for business, you deduct 60% of actual expenses or claim the standard rate only on business miles.

Get help maximizing your vehicle deductions → Book a Tax Sherpa consultation