Deducting the miles you drive for business purposes is a great way to lower your taxable income. But if you’re like most people, you use the same vehicle for business and personal travel. This can make the deduction process a little more complicated.
First, you need to figure out how many miles you traveled for business and how many you drove for personal travel. Then you will need to choose a method to calculate your deduction. You will either use the standard mileage rate method or the actual expense method to find your deduction amount.
Quick tip: Most newer vehicles’ odometers come with settings to add multiple “Trips,” and since each trip starts at 0 miles to begin with, you can use the “Trip A” setting for personal miles and the “Trip B” setting for business miles.
How the standard mileage rate method works
The standard mileage rate method is very straightforward. Simply multiply the total business miles you drove all year by the rate for the year.
The following standard mileage rates apply to miles driven in 2025:
- 70 cents per mile driven for business use
- 21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces (1 cent decrease from prior year)
- 14 cents per mile driven for charitable organizations
Here’s an example of how the standard rate works. Let’s say you drove 5,000 miles for Uber this year. According to the standard method, you would multiply the number of miles you drive by the rate for that year:
5,000 (total business miles) x $0.70 (mileage rate)
= $3,500 (standard rate mileage deduction)
How the Actual Expense Method for Mileage Works
Using the actual expense method is more in-depth than the standard method. First, you will need to determine how many of the miles you traveled were for your business. Then you’ll need to find what percent of your total miles that represents.
For example, if you drove 10,000 miles in a year but only 5,000 were for business, then 50% of your miles were business miles. Next, you will add up all your vehicle-related expenses. These include gas, oil, maintenance, car washes, repairs, insurance, etc.
To make sure you aren’t missing out on deducting any business expenses, it is very important to keep your receipts. Once you have a total dollar amount, you will need to multiply this by the percent you calculated. In the example above, it was 50%.
How many miles can you write off as a deduction?
There is no limit to the number of miles you can deduct, but they must be business-only miles. These can include:
- Driving from home to a client appointment or open house
- Driving from home to a business conference
- Driving from home to business out of town
- Driving from home to a temporary work location
- Driving from your office to a client appointment or open house
- Driving from your office to a business conference
- Driving from your office to business out of town
- Driving from your office to a temporary work location
Note: You cannot deduct miles if you drive from home to your regular office.
If you are a rideshare driver, the IRS permits you to claim the miles driven while traveling from the drop-off point of one passenger to the pickup location of your next passenger. To ensure accuracy and minimize common rideshare driver tax mistakes, you should track your mileage separately from the rideshare app. This will help you keep detailed records and maximize your mileage deductions.
The standard mileage rate method may be right for you if:
- You don’t diligently keep track of records and receipts for vehicle expenses throughout the year. Using the standard method, the only record you will need is your mileage.
- Your vehicle gets good gas mileage and did not require any major repairs during the year.
The actual expense method may be right for you if:
- You used the actual expense method the first year you claimed the mileage deduction. This is because you cannot switch from the actual expense method to the standard method if you used the actual expense method the first year you used your vehicle for business.
- Your vehicle is not fuel efficient, so you spend a lot on gas.
- Your vehicle needed expensive repairs during the year.
Limitations to claiming business mileage
While it can be a great way to offset some of your vehicle expenses, there are a few limitations to consider when deducting business mileage.
First, personal commuting mileage usually doesn’t qualify for tax deductions, as it’s considered a personal expense.
Second, claiming mileage is typically limited to self-employed individuals, employees not reimbursed by their employers, and certain business owners.
Finally, the standard business mileage deduction cannot be claimed if you:
- Use five or more cars at the same time (such as in fleet operations).
- Claimed a depreciation deduction for the car using any method other than straight line for the car’s estimated useful life.
- Claimed a section 179 deduction on the car.
- Claimed the special depreciation allowance on the car.
- Claimed actual car expenses after 1997 for a car you lease.
Note: Keeping receipts and supporting documents for your mileage claims is essential. You must maintain accurate and detailed records of your business-related mileage, including dates, destinations, and the purpose of each trip.
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