Can I Deduct Mileage as an Independent Contractor?

April, 02 2025 by Karen Thomas-Brandt, EA

So many of us today are working second jobs to make ends meet. Many of those jobs, such as food delivery and Uber or Lyft drivers, make us independent contractors in the tax world. This means that our income is reported to us on Form 1099 (rather than Form W-2), and we use Schedule C, Profit or Loss From Business, when filing our return. This also means we can deduct certain expenses we incur to make that income. The cost of using our vehicle could be one of those expenses.

If you use your vehicle for your independent contractor business, you may be able to take a deduction on Schedule C for the business use of that vehicle. Generally, the costs of commuting between your home and place of business are not deductible, regardless of how far you may live between your home and work locations. However, if you operate your business from your home (and that is your only office space) and use the area regularly and exclusively for your business, you may be able to deduct the costs of driving between your home and your place of business. If you work in two places in a day, whether or not for the same client or customer, you can deduct the expenses of getting from one workplace to the other. Some of us may fall into a unique situation where you have no regular work location, such as an Uber or Lyft driver, and you start your day from home but not a home office. In this case, your drive from home to your first stop (or first customer) and your drive from your last stop (or last customer) to home are commuting and not deductible. As you can see, home office and vehicle expense deductions are complicated areas and not straightforward. But let’s try to simplify it for you just a bit.

You can generally calculate the deductible expenses using either the standard mileage rate or your actual expenses, but not both.
 

Standard Mileage Rate

Using the standard mileage rate for the business use of a vehicle allows a set rate for each business mile driven. For 2025, that rate is 70.0 cents per mile, which covers the costs for fuel, insurance, lease payments, registration, vehicle maintenance (oil, tires, repairs, etc.), and depreciation. In addition to the standard rate, you can also deduct any business-related parking fees and tolls. However, parking fees related to parking at your normal work location or tolls related to driving from home to work or work to home are nondeductible commuting expenses.

Let’s look at an example:
Joe is a self-employed CPA. He starts each morning by driving 10 miles to his office to check emails and return phone calls. Then, he drives 50 miles to various clients’ houses to collect paperwork and discuss other important business matters. Joe knows all of these activities could be done online, but his clients are old school and appreciate the face-to-face time Joe gives to every one of them. At the end of the day, Joe drives back to the office to drop off paperwork and then drives home. Joe can deduct the 50 miles he drives daily from the office to clients’ homes and back to the office, but he cannot deduct the 10 miles he drives (each way) from home to his office and back.
 

Actual Expenses

If you do not use the standard mileage rate, you can use actual expenses, which include gas, insurance, repairs and maintenance, registration, lease payments, and depreciation. The amount you may deduct for actual expenses is the total expenses multiplied by the percentage of business use determined from your mileage log.

Let’s look at an example:
From our example above, Joe can choose to take the standard mileage rate for his deduction, which, in 2025, would be 70.0 cents for every business mile claimed. So, for Joe, that would be 70 cents times 50 miles, which equals $35. Alternatively, Joe can keep track of and collect receipts for all of his actual expenses (gas, maintenance, registration, etc.). The amount of his deduction would be the sum of the actual expenses multiplied by the business use percentage (business miles driven divided by the total miles driven). Additionally, with actual expenses, there is a deduction for vehicle depreciation. Joe would most likely pick the method that gave him the biggest deduction.
 

What else do I need to know about deducting mileage?

If you want to use the standard mileage rate, you generally must choose to use it in the first year the car is available for business use. Then, you can use either the standard mileage rate or actual expenses in later years. If you used the actual expense method the first year the vehicle was available for business use, you must continue to use that method for all years there is business use of the vehicle.

 

What happens if I get audited for my vehicle mileage?

In the event of an audit, you will need to provide documents verifying your vehicle expense deduction on Schedule C. The best way to do this is to keep a log to track your mileage. The log should include the following:
 

•  Who did you meet with, and what was their job title or business relationship?
• What was the business reason for the meeting or trip?
• When the trip was made, i.e., the date of the trip or meeting.
• Where you went and the number of miles driven to each destination.

If you use the actual expense method, you must also provide a receipt and proof of payment for each expense claimed.

If you are facing an audit involving vehicle mileage deductions and need help, please contact us. TaxAudit’s Audit Defense provides taxpayers with peace of mind if they receive a notice from the IRS or state tax agency or if their return is selected for audit. To learn more about TaxAudit’s prepaid Audit Defense click        here.