Standard Mileage Rate vs. Actual Car Expenses

• Driving between work locations, to clients, suppliers, the bank or the post office for business.
• Gig driving from the moment you accept a ride or delivery, and usually while waiting for requests.
• Trips from a qualifying home office to a business location.
• Not deductible: commuting from home to a regular workplace, and personal errands.

W-2 employees cannot deduct unreimbursed car expenses on their federal return.

For 2026 the IRS business standard mileage rate is 72.5 cents per mile. The rate covers gas, maintenance, insurance, registration and depreciation. You can still deduct the business share of parking fees, tolls and auto loan interest (self-employed only) on top.

You add up all car costs for the year and multiply by your business-use percentage:

• Fuel and oil, repairs, tires, maintenance
• Insurance, registration, license fees
• Lease payments, or depreciation if you own the car
• Loan interest (self-employed), garage rent, car washes

Depreciation follows MACRS and the luxury auto limits, with bonus depreciation available. Heavy SUVs and trucks over 6,000 lbs gross weight can qualify for larger first-year write-offs.

If you own the car and want the standard rate in any year, you must use it in the first year the car is used for business. After that you can switch to actual expenses (using straight-line depreciation). If you start with actual expenses and accelerated depreciation, you cannot switch back. Leased cars that start on the standard rate must stay on it for the entire lease.

Kevin drives 20,000 miles a year, 15,000 for delivery apps (75% business). His costs: fuel $3,200, insurance $1,800, maintenance $900, registration $200, depreciation $3,000, for $9,100 total.

• Standard rate: 15,000 × $0.725 = $10,875.
• Actual expenses: 75% × $9,100 = $6,825.
• The standard rate wins by about $4,050, saving roughly $1,200 in combined income and SE tax.

Fuel-efficient cars with high mileage usually favor the standard rate. Expensive vehicles with low mileage, or high insurance costs in cities, often favor actual expenses. Use the gig worker tax calculator to see the impact on your bill.

Vehicle deductions require contemporaneous records: date, destination, business purpose and miles for each trip, plus start and end odometer readings for the year. Mileage-tracking apps satisfy this. The miles shown in a rideshare app summary often omit driving between trips, so your own log usually captures more deductible miles. See IRS Publication 463.