Last reviewed 2026-09-13 · 8 min read
If you drive to client meetings, job sites, the post office for supplies, or between multiple workplaces in a day, some of that driving may be deductible as a business expense. The IRS gives self-employed taxpayers two different ways to figure the deduction: the standard mileage rate or actual vehicle expenses. Neither is automatic — both require you to track your driving and keep records that support the numbers on your return.
This guide is a planning overview, not tax advice for your specific situation. Which method produces a larger deduction depends on how much you drive, how expensive your vehicle is to operate, and how it's titled and used. A tax professional can help you choose and apply either method correctly.
What counts as business driving
The IRS treats commuting — driving between your home and a regular place of business — as personal, non-deductible mileage, even if you're self-employed and even if you spend the drive on the phone with a client. This trips people up constantly: driving from your house to a coworking space you rent five days a week generally isn't business mileage.
Business miles are things like driving from your home office to a client's office, between two job sites in the same day, to pick up supplies, or to a bank to make a business deposit. If you have a qualifying home office as your principal place of business, trips from home directly to client locations can generally count as business mileage rather than commuting — but the qualifying-home-office determination matters and isn't automatic.
- Commuting to a fixed regular workplace: personal, not deductible
- Client site visits, supply runs, bank trips for the business: potentially business miles
- Mixed-use trips (personal errand plus business stop) need to be allocated, not claimed in full
Method one: the standard mileage rate
The standard mileage rate is a per-mile amount the IRS sets and updates, usually annually, meant to approximate the cost of operating a vehicle for business (gas, depreciation, maintenance, insurance) rolled into one number. You multiply your business miles for the year by that rate to get your deduction. Because the rate changes from year to year, don't rely on a memorized figure — check the current rate on IRS.gov before estimating anything.
Using the standard mileage rate is generally simpler from a recordkeeping standpoint because you don't need to save every gas and repair receipt, but there are rules about which vehicles and situations qualify, and about switching methods in later years for the same vehicle. If you want to use this method, you typically need to choose it in the first year the vehicle is used for business.
Method two: actual expenses
The actual expense method has you total up what it really cost to run the vehicle — gas, oil, repairs, tires, insurance, registration fees, and depreciation (or lease payments) — and then apply your business-use percentage to that total. Business-use percentage is generally business miles divided by total miles driven for the year, so this method also requires a mileage log even though it isn't mileage-rate-based.
Actual expenses can produce a larger deduction for vehicles that are expensive to operate or that depreciate heavily, but the calculation is more involved and depreciation rules for vehicles have their own limits and complexities. This is a case where sitting down with a preparer once to model both methods against your real numbers is usually worth it.
A simplified worked comparison
Say a freelance photographer logs 6,000 business miles in a year out of 18,000 total miles driven (a 33% business-use percentage). Under the standard mileage method, they'd multiply 6,000 by whatever that year's IRS rate is. Under actual expenses, they'd total their gas, insurance, maintenance, and depreciation for the year and multiply that total by 33%.
Which is larger depends entirely on the vehicle and the rate for that year — an inexpensive, fuel-efficient car with a high business-use percentage often favors the standard rate, while a newer or more expensive vehicle with a lot of depreciation might favor actual expenses. This is illustrative only; run your own numbers or have a preparer run them.
Recordkeeping that actually holds up
Whichever method you use, the IRS expects contemporaneous records — meaning you log trips close to when they happen, not reconstructed from memory in March. A log should show the date, destination, business purpose, and miles for each trip.
A mileage-tracking app that logs GPS trips as you drive, or a simple spreadsheet updated weekly, both work. What doesn't hold up well is an estimate made at tax time with no documentation behind it.
- Date, starting point, destination, and business purpose for each trip
- Odometer readings at the start and end of the year
- Receipts for gas, repairs, insurance, and registration if using actual expenses
Depreciation limits and vehicle type
If you use actual expenses, depreciation for passenger vehicles is subject to annual limits set by the IRS (often called luxury auto depreciation limits), which cap how much you can deduct per year regardless of the vehicle's cost. Heavier vehicles like some trucks and SUVs are governed by different rules. These limits change and have technical exceptions, so check current IRS guidance rather than assuming a number.
The vehicle's business-use percentage also affects depreciation, and switching between personal and business use, or between methods, can have consequences down the road — including when you eventually sell or trade in the vehicle.
Leased vehicles
If you lease rather than own, the actual expense method lets you deduct the business-use portion of lease payments instead of depreciation, but there's a separate inclusion amount adjustment for higher-value leased vehicles that can reduce the deduction slightly. The standard mileage rate can also be available for leased vehicles under certain conditions.
What TaxStow can and can't do here
TaxStow's estimate tools can help you see roughly how a vehicle deduction might affect your quarterly tax cushion once you know your numbers, but they don't calculate mileage deductions or choose a method for you. That determination depends on details (vehicle cost, use pattern, prior-year elections) that are best handled with a tax professional or tax software built for that purpose.
Takeaways
- ·Commuting between home and a regular workplace is personal mileage, not a deduction, even for the self-employed.
- ·The standard mileage rate and actual expenses are the two IRS-recognized methods; the rate itself changes yearly, so check IRS.gov for the current figure.
- ·Actual expenses require tracking real costs plus mileage to compute a business-use percentage.
- ·Vehicle depreciation is subject to IRS limits that vary by vehicle type and change periodically.
- ·A contemporaneous mileage log is the backbone of either method — reconstructed estimates are weak support.
Sources and further reading
Federal tax planning information only. TaxStow is not a tax preparer and this is not tax advice. State and local rules are separate, and a qualified professional can account for details this page cannot.