If you drive for your business, you have a real deduction — often a large one — but it comes with the strictest recordkeeping expectations of any common expense. The IRS asks for contemporaneous documentation of business mileage, and courts routinely throw out reconstructed logs. So before choosing a calculation method, commit to the log.
What counts as a business mile
Business miles include driving to client sites, between work locations, to suppliers, the bank, the post office for business mail, and to business meetings and conferences.
What doesn't count: commuting. Driving from home to your regular place of work is personal, full stop — regardless of distance, cargo, or the phone call you took on the way. Two useful wrinkles:
- If your home office qualifies as your principal place of business, you have no commute; trips from home to any business destination are business miles. This is one of the quiet benefits of a qualifying home office.
- Driving between two work locations in the same day (office to client, client to client) is business mileage even when the first leg from home wasn't.
Method 1: the standard mileage rate
The simple method: multiply business miles by the IRS rate for the year (70 cents per mile for 2025; the rate is set annually, so check the current figure). That single number stands in for gas, insurance, repairs, maintenance, and depreciation. Parking fees and tolls for business trips are deductible on top.
To use the standard rate you must choose it in the first year the car is used for business (for owned cars). After that you can switch between methods year to year, with some depreciation adjustments. If you lease and choose the standard rate, you must keep it for the whole lease term.
The standard rate favors people who drive economical cars a lot of miles: high reimbursement, minimal paperwork.
Method 2: actual expenses
The actual method deducts the business-use percentage of everything the car really costs:
- Fuel, oil changes, repairs, tires, washes
- Insurance, registration, lease payments or depreciation
- Interest on a car loan (business portion, for self-employed)
Business-use percentage comes from — you guessed it — the mileage log: business miles divided by total miles. If 60% of your driving is business, 60% of costs are deductible.
Actual expenses tend to win for expensive, thirsty, or heavily depreciating vehicles, and for work trucks and vans. The price is bookkeeping: every fuel stop and repair needs to land in your books, categorized and receipted.
The log is not optional
Whichever method you use, the substantiation requirement is the same. For each business trip: date, destination, business purpose, and miles. Plus odometer readings that establish total annual miles.
Practical ways people actually sustain this:
- A mileage-tracking app that auto-detects drives and lets you swipe business/personal. Export the report at year end.
- A recurring calendar reminder to photograph the odometer on January 1 and log weekly trips.
- For predictable routes (weekly client visit, same 22 miles), a standing note plus a count of occurrences.
"Contemporaneous" doesn't mean instant, but it means close to the fact — a weekly log entry is fine; a March reconstruction of last year is not.
Bookkeeping mechanics
With the standard rate, actual fuel and repair transactions on your business card would double-count the deduction — pay car costs personally and record the mileage deduction at tax time, or record a periodic entry for miles-times-rate if you want your books to reflect it.
With actual expenses, do the opposite: run vehicle costs through the business consistently, then apply the business-use percentage at tax time. Either way, keep parking and tolls in your books in both methods — they're deductible separately.
Run both calculations your first year. The difference is often hundreds or thousands of dollars, and the first-year choice constrains your options later.