The Tax Cut and Jobs Act of 2017 that took effect in 2018 changed the rules for deducting mileage and gas expenses. From 2018 until 2025, only Armed Forces reservists, qualified performing artists, and some government officials can claim their job-related car expenses. This means that most employees who drive their own car for work purposes and are not repaid for their costs cannot deduct their car expenses.
But the good news is that there has been no change to these rules for self-employed taxpayers. They can continue to deduct their car expenses at the standard rate of 54.5 cents per mile driven for business. Or, they can deduct the amount of their actual expenses multiplied by the percentage of the car’s use for business. Taxpayers who own rental properties can also use this rate for any mileage incurred relating to their rental activities, such as driving from their home to the rental property to perform necessary maintenance or repairs.
There is also good news in other areas. The mileage and gas deduction for medical and charitable purposes was not changed. Taxpayers who drive for medical purposes such as doctor visits can deduct their mileage at the standard rate of 18 cents per mile. Or, they can choose to deduct the actual cost of gas and oil for their medical-related journeys.
Taxpayers can deduct out-of-pocket expenses such as driving their car while doing volunteer work for a charitable organization. They can choose between the standard rate (14 cents per mile) or the actual cost of gas and oil related to the miles they drove for charitable purposes.
Expenses for tolls and parking can also be deducted when a car is used for your small business, rental properties, medical or charitable purposes.
Finally, it is important for anyone who thinks they may meet any of the above conditions to make sure to keep accurate and contemporaneous mileage logs as well as receipts for their car expenses. This is a frequently audited deduction, and without good documentation the amount claimed will not likely be allowed.