How Does the Mileage Tax Deduction Work?
A dashboard odometer doesn’t look like a tax document, but for anyone who drives for work, it can end up being one of the more valuable records they keep all year.
The short answer
The mileage deduction lets self-employed people and certain other taxpayers deduct the cost of driving for business purposes, either by tracking a standard per-mile rate set by the government or by calculating actual vehicle expenses like gas, maintenance, and depreciation. It applies to business driving specifically — commuting from home to a regular workplace generally doesn’t count.
The two methods, in plain terms
- The standard mileage rate. A flat amount per mile driven for business, set periodically by tax authorities and adjusted over time. It’s simple: track the miles, apply the rate, and that’s the deduction.
- The actual expense method. This involves adding up real costs of operating the vehicle — fuel, repairs, insurance, depreciation — and then deducting the percentage that corresponds to business use versus personal use.
Choosing between the two generally depends on how much a vehicle is driven for business, how good the recordkeeping is, and which method produces a more accurate reflection of actual costs. Some rules around switching between methods over time apply, so it’s worth understanding the trade-offs before settling on one.
What counts as business driving
Trips between a home office and a client meeting, driving to pick up business supplies, or traveling between multiple job sites in a day are typical examples of deductible business mileage. Commuting from home to a single regular place of work generally isn’t deductible, even for self-employed people, which surprises some first-time filers. The distinction hinges on the purpose and pattern of the trip, not just whether it happens to relate to work in some general sense.
How it fits with other deductions
For people running a business from home, mileage deductions often show up alongside other work-related write-offs, including the home office deduction, on a Schedule C. Both rely on similar principles — regular, documented, business-purpose use — and both benefit from the same kind of disciplined recordkeeping throughout the year rather than an attempt to reconstruct it later.
Why documentation matters so much
Because mileage deductions are based on trips that are hard to verify after the fact, a contemporaneous log — noting the date, purpose, and distance of each trip — is the standard way to support a claim if it’s ever questioned. Mileage-tracking habits tend to matter just as much as the deduction itself; a rough estimate at the end of the year is far less defensible than a running log kept trip by trip.
A practical habit
Whether using a paper log, a spreadsheet, or a tracking app, the most reliable approach is recording mileage as it happens rather than trying to remember it months later. This kind of ongoing tracking is especially relevant for anyone navigating freelance or contract tax obligations, where multiple clients and job sites can make trip purposes hard to reconstruct after the fact. The deduction itself is straightforward in concept — it’s the habit of tracking that determines whether it holds up.