Standard Mileage Deduction

The standard mileage deduction is a method for deducting the cost of using a car for business by multiplying business miles driven by an IRS-set rate per mile, rather than tracking and deducting the vehicle's actual expenses. It is the simpler of the two allowed methods, because it folds gas, maintenance, insurance, and depreciation into a single per-mile figure. The alternative, the actual-expense method, deducts the real costs of operating the vehicle multiplied by the share of use that is for business. The choice between them, and especially the choice made in the first year, carries rules that outlast that first return.

The IRS sets an optional standard mileage rate each year, publishes it in a notice, and has on occasion raised it partway through the year, so the correct business rate depends on the year and sometimes on which half of the year the miles were driven. For 2026, for example, the IRS set the business rate at 72.5 cents per mile for January through June and raised it to 76 cents for July through December. Because the figure moves, the current rate should always be taken from IRS.gov rather than memory, and a driver whose year spans a mid-year change applies each rate to the miles driven while it was in effect.

Which method a driver may use is constrained by several rules, most of which turn on the first year the vehicle is used for business. To preserve the ability to switch between methods in later years, a driver generally must use the standard mileage rate in that first year; start with actual expenses and the standard rate is off the table for that car thereafter. A leased vehicle is stricter still: if the standard mileage rate is chosen, it must be used for the entire lease term. And the standard rate cannot be used at all if the owner has claimed depreciation on the vehicle by a method other than straight-line, has taken a section 179 deduction or the special depreciation allowance on it, or operates five or more vehicles at the same time, which the IRS treats as a fleet.

Whichever method is used, business parking fees and tolls are deductible in addition to the mileage or actual expenses, because they are not part of the per-mile cost the standard rate is meant to cover. And in every case only the business portion of driving counts: commuting between home and a regular workplace is a personal, nondeductible cost, so a careful log distinguishing business miles from personal miles is what makes the deduction defensible.

Under the standard mileage method the deduction is simply business miles multiplied by the year's rate. Using a hypothetical rate for a clean example: suppose a rideshare driver logs 12,000 business miles in a year and the standard mileage rate for that year is 70 cents per mile. The deduction is 12,000 times $0.70, or $8,400, plus any business parking and tolls on top.

The actual-expense method would instead total the real costs of the car for the year, gas, insurance, repairs, and depreciation, and deduct the share equal to business use. If that same driver spent $10,000 running the car and drove it 60% for business, the actual-expense deduction would be $6,000. In this hypothetical the standard rate produces the larger deduction, but for a driver with an expensive vehicle and heavy costs the actual-expense method can win, which is why the first-year choice matters: choosing the standard rate first keeps both doors open in later years.

Pros

• Far simpler: a mileage log replaces tracking every fuel and repair receipt.
• Often produces a larger deduction for fuel-efficient or inexpensive vehicles driven many business miles.
• Parking and tolls are still deductible on top of the rate.

Cons

• Can produce a smaller deduction than actual expenses for a costly vehicle with heavy operating costs.
• Cannot be used at all if the vehicle was depreciated by certain methods, took a section 179 deduction, or is part of a fleet of five or more.
• Locks in a choice: starting with actual expenses forecloses the standard rate for that car, and a leased car must keep the standard rate for the whole lease if it is chosen.
• Requires a contemporaneous mileage log to separate business from personal driving.