Can I Deduct Mileage and Gas on My Taxes?

October, 03 2024 by Steve Banner, EA, MBA

Depending on the facts and circumstances of your situation, the answer to this question may be a resounding “yes.” But only if you meet certain conditions. Please allow me to explain.

The tax code says that anyone who runs a business, whether large or small, is entitled to deduct “ordinary and necessary¹” expenses from their business income when calculating their liability for taxes. No matter whether you’re a busy self-employed landscaper or a part-time babysitting contractor – if your work activities require you to use your own motor vehicle, then you can generally claim a deduction for your associated costs. However, it’s important to bear in mind that you can only claim a deduction for the portion of your vehicle costs that are related to your business. You cannot claim a deduction for using your vehicle for personal purposes.

Before we go any further, let us review the distinction between miles that are deductible and non-deductible.
 

Non-Deductible Miles

Contrary to the earnest desire and fervent belief of many taxpayers, the costs of driving a car or taking any other form of transportation between your home and your main or regular place of work are not deductible. These costs are regarded as personal commuting expenses, which are not deductible. No matter how far away your regular place of work is from your home, you cannot deduct commuting expenses, even if you conduct a meeting with your colleagues in the car or make business phone calls during your commuting trip.

However, there is an exception to this rule if your home is your principal place of business. In that case, the costs of your journey to and from the location of your workplace each day are deductible.
 

Deductible Miles

Motor vehicle expenses that may be deductible from your business income include the ordinary and necessary costs of all of the following:

• Going from one workplace to another within the city or general area that is your tax home while conducting your business
• Visiting clients or customers
• Going to a business meeting at a location that is a distance away from your regular workplace
• Going to a temporary work location other than your regular or main work location

Keeping a Mileage Log

The rules we have just reviewed will help you to understand which of your daily and weekly journeys may be eligible for claiming a deduction. However, it is very important – as well as an IRS requirement – that you keep accurate records of your driving that state the purpose and location of each trip as well as the miles traveled. These records should be created at the time of each trip to help ensure that no details are missed or overlooked. In other words, the records should be “contemporaneous,” which is the term used by the IRS.

For this purpose, many taxpayers use a written journal or logbook that they keep in the vehicle. A number of software applications that use a smartphone, tablet, or laptop are also available for the same purpose. These records should be available for review in case the IRS ever denies or raises questions about a mileage deduction claim.
 

Claiming the Deduction

Based on the records they have kept throughout the year, taxpayers can generally use one of the two following methods to determine their deductible expenses:

• standard mileage rate, or
• actual car expenses

Standard Mileage Rate

If you choose to use this method to figure the deductible costs of operating your car for business purposes, you will multiply your number of business miles by a fixed rate that is set each year (65.5 cents per mile for 2023; 67 cents per mile for 2024). These rates are calculated to include an allowance for depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance, or vehicle registration fees for each year.

Actual Car Expenses

Taxpayers who do not use the standard mileage rate may be able to deduct the actual expenses associated with their vehicle. This method allows you to claim the business-related portion of the following types of expenses for your car:

• depreciation
• lease payments
• registration fees
• licenses
• gas
• repairs
• oil
• garage rent
• tires
• insurance

Using this method requires you to keep detailed records of the above expenses so that you calculate your deduction by dividing your expenses between business and personal use. The most convenient way to allocate your costs is to divide the expenses based on the miles driven for each purpose. This means that even if you plan to use the Actual Expenses method to calculate your deduction, you should still keep track of your mileage so that you can correctly calculate your business vs. personal use percentages.

Example: Todd is a contract sales representative for a publishing firm and drives his car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. He can claim only 60 percent (12,000 ÷ 20,000) of the cost of operating his car as a business expense. In 2024, if he used the standard mileage rate, he would be able to claim a deduction of $8,040 (12,000 x 67 cents).

When it comes to choosing between these two different methods of calculating your deduction, it is important to know the following regarding the first year that your car is available for use in your business:

This means that if you use the Standard Mileage method for your first year, you can, in each future year, choose to use whichever of the two methods provides the larger deduction amount.
 

Other Deductions for Driving

Even if you did not use your vehicle for business purposes during the year, you may be able to claim a deduction for your costs related to driving for other purposes.

Taxpayers who drive for medical purposes, such as doctor visits, can deduct their mileage at the standard rate of 21 cents per mile for 2024 or 22 cents per mile for 2023. They can also choose to deduct the actual cost of gas and oil for their medical-related journeys.

You can also deduct out-of-pocket expenses, such as driving your car while doing volunteer work for a charitable organization. You can choose between the standard rate (14 cents per mile for both 2023 and 2024) or the actual cost of gas and oil related to the miles you drove for charitable purposes.

Regardless of whether you choose to use the Standard Mileage or Actual Expenses methods to calculate your vehicle deduction for business, medical, or charitable purposes, you can also include the deductible portion of your expenses for:

• tolls and parking fees,
• interest expense on an auto loan, and
• personal property taxes.

As a final reminder, anyone who thinks they may meet any of the above conditions should keep accurate and contemporaneous mileage logs and receipts for their car expenses.
 

[1] 26 U.S. Code § 162 (a)