Business Vehicle Expenses: Standard Mileage vs. Actual Expenses

If you drive for your business, vehicle expenses can be one of your biggest deductions. You have two ways to claim them.

Option 1: The standard mileage rate

Multiply your business miles by the IRS standard mileage rate. For 2026, the rate is 72.5 cents per mile, up from 70 cents in 2025.

Example: 8,000 business miles × $0.725 = $5,800 deduction.

You can still deduct business parking and tolls separately. The rate covers gas, insurance, maintenance, repairs and depreciation, so you don't deduct those on top.

Pros: simple, requires less recordkeeping, often generous for fuel-efficient cars.

Option 2: Actual expenses

Add up what you actually spent on the vehicle, then multiply by your business-use percentage:

• Gas and oil
• Insurance
• Repairs and maintenance
• Tires
• Registration fees
• Lease payments, or depreciation if you own it
• Loan interest (for business owners)

Example: $12,000 in total vehicle costs, 60% business use = $7,200 deduction.

Pros: often better for trucks, vans and expensive vehicles, or when you drive fewer miles but costs are high.

Choosing between them

• If you own the vehicle and want flexibility, consider using the standard mileage rate in the first year. Generally, if you start with actual expenses on an owned vehicle, you can't switch to the standard rate later for that vehicle.
• For leased vehicles, if you use the standard rate, you must use it for the entire lease.
• Heavy work trucks and vans may get large first-year deductions under Section 179 or bonus depreciation with the actual expense method, subject to vehicle limits.

What counts as business miles?

Business miles:

• Driving to client locations or job sites
• Trips to suppliers, the hardware store or the post office for business
• Driving between work locations
• Going to the bank for business deposits

Not business miles:

• Commuting from home to a regular office or shop
• Personal errands, even if you stop at a client on the way (only the business portion counts)

If your home is your principal place of business, trips from home to clients are generally business miles.

Keep a mileage log

The IRS expects a record made at or near the time of the trip, including:

• Date
• Destination
• Business purpose
• Miles driven

Apps that track mileage automatically make this easy. A notebook in the glovebox works too. Record your odometer reading on January 1 and December 31 each year.

S-corp and multi-vehicle notes

If your S-corp uses your personal car, the company typically reimburses you at the standard rate under an accountable plan. Businesses with five or more vehicles used at the same time can't use the standard mileage rate.

The bottom line

Track every business mile from day one. At year-end, compare both methods with your bookkeeper and pick the one that gives you the larger legitimate deduction.

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Need help getting this right? TRIG Bookkeeping & Tax Services helps new business owners in Washington with company registration, monthly and annual bookkeeping, and government compliance. Contact us to talk about your business.

This article is general information, not legal or tax advice for your situation. Tax rules and fees change, so confirm current details with the IRS, the Washington Department of Revenue, or a qualified professional.