Business Mileage Deduction: Standard Rate vs Actual Expenses for the Self-Employed
If you drive to meet clients, pick up supplies or travel between job sites, those miles can lower your tax bill. For many freelancers, contractors and gig workers, vehicle costs are one of the largest deductions available, and one of the most poorly documented. This guide covers what counts, the two calculation methods, and the record-keeping that makes the deduction stick.
What counts as business driving
Business miles are trips made for your business. Common examples:
- Driving to meet a client or prospect.
- Driving between two work locations on the same day.
- Trips to the bank, post office or supplier for business errands.
- Driving to a temporary work location (generally one expected to last a year or less).
- Travel to a conference or training related to your current business.
Commuting is not business driving
Driving from home to your regular place of business, such as a rented office or studio, is commuting and is never deductible. The picture changes when your home office is your principal place of business: trips from your home office to clients or other work locations are business trips. That is one reason a qualifying home office is valuable beyond the office deduction itself.
Method 1: the standard mileage rate
The IRS sets a cents-per-mile rate each year that covers gas, maintenance, insurance, registration and depreciation. You multiply your business miles by that rate. (For reference, the 2025 rate was 70 cents per mile; check IRS.gov for the current year's rate.)
On top of the standard rate you can still deduct:
- Business parking fees and tolls.
- The business percentage of interest on a car loan (for self-employed people).
- The business percentage of personal property tax on the vehicle.
Example: 6,000 business miles × $0.70 = $4,200, plus $300 of parking and tolls = $4,500.
Rules for using the standard rate
- For a car you own, you must choose the standard rate in the first year you use it for business. In later years you can switch between methods (with depreciation limits if you move to actual expenses).
- For a car you lease, if you choose the standard rate you must use it for the entire lease period.
- You cannot use the standard rate if you operate five or more vehicles at the same time, or after claiming certain accelerated depreciation on the vehicle.
Method 2: actual expenses
With the actual expense method you add up what it really costs to run the vehicle and deduct the business-use percentage. Eligible costs include gas, oil, repairs, tires, insurance, registration, lease payments, garage rent, and depreciation (subject to annual limits for passenger vehicles).
Example: total vehicle costs of $9,000 including depreciation. You drove 15,000 miles, of which 6,000 were business: 40% business use. Deduction = 40% × $9,000 = $3,600, plus parking and tolls.
Actual expenses tend to win for expensive vehicles, vehicles with high operating costs, or vehicles used mostly for business. The standard rate tends to win for economical cars driven many miles.
How to choose
| Situation | Often better |
|---|---|
| Fuel-efficient car, high mileage | Standard mileage rate |
| Expensive vehicle or high insurance costs | Actual expenses |
| Want minimal record-keeping beyond a mileage log | Standard mileage rate |
| Vehicle used almost entirely for business | Run both; actual expenses often wins |
If you are unsure in the car's first business year, choosing the standard rate keeps both options open for later years.
The mileage log: the part that matters most
Vehicle deductions are a frequent focus in audits because people estimate instead of recording. The IRS expects records made at or near the time of the trip. For each business trip, record:
- Date
- Starting point and destination
- Business purpose (for example, "Client meeting, Acme Co.")
- Miles driven
Also record the odometer reading at the start and end of the year so you can show total miles and the business percentage. A paper notebook in the glove box works; so does a GPS mileage-tracking app, as long as you label trips as business or personal.
Where it goes on your return
Sole proprietors report vehicle expenses on Schedule C, line 9, and answer the vehicle questions in Part IV (or on Form 4562 if depreciation is claimed). Gig drivers using platforms often receive summaries of "online miles"; your deductible miles may be higher if you also drove between trips while available for work, so keep your own log rather than relying only on the platform's figure.
Common mistakes
- Deducting commuting miles to a regular office.
- Reconstructing a year of mileage in April from memory.
- Claiming 100% business use for a car that is also the family vehicle.
- Forgetting parking and tolls, which are deductible under either method.
- Using the standard rate in year one on a leased car without realizing you are locked in for the lease.
Bottom line
Keep a simple, contemporaneous log, decide on the method in your vehicle's first business year, and run both calculations when you are allowed to switch. For many self-employed drivers, that habit is worth thousands of dollars a year in deductions you can defend.
Official sources: IRS Publication 463 (Travel, Gift, and Car Expenses), the IRS standard mileage rates page, and Schedule C instructions.