If you use your vehicle for business, you may be able to deduct the cost of operating it. The IRS generally allows you to choose between two methods:
- The standard mileage rate
- The actual expenses method
The method you choose can affect the size of your deduction and the records you'll need to keep, so it's important to understand the rules before filing.
When Can You Use the Standard Mileage Rate?
The standard mileage rate lets you deduct a set amount for each business mile driven rather than tracking every vehicle-related expense.
For 2026, the IRS standard mileage rate for business use is 72.5 cents per mile for miles driven January 1 through June 30, 2026. The IRS later increased the rate to 76 cents per mile for business miles driven July 1 through December 31, 2026.
If you choose the standard mileage rate in the first year you place your vehicle in service, you can generally switch between the standard mileage method and the actual expenses method in later years. However, if you later use actual expenses, you'll need to keep track of any depreciation adjustments required by the IRS.
If the vehicle is leased and you choose the standard mileage rate, you must continue using that method for the entire lease period, including renewals.
Keep a Mileage Log
Good records are essential. Maintain a mileage log that includes:
- Date of each trip
- Business purpose
- Starting and ending locations
- Miles driven
When Is the Standard Mileage Rate Not Allowed?
You can't use the standard mileage rate if you:
- Operate five or more vehicles at the same time (such as in a fleet operation)
- Claimed depreciation using a method other than straight-line depreciation
- Claimed a Section 179 deduction for the vehicle
- Claimed a special depreciation allowance on the vehicle
- Claimed actual vehicle expenses after 1997 for a leased vehicle
When Can You Use Actual Expenses?
The actual expenses method allows you to deduct the business portion of your vehicle's operating costs.
If you choose the actual expenses method in the first year the vehicle is placed in service, you generally must continue using that method for that vehicle.
If you used the standard mileage rate in the first year and later switch to actual expenses, you can't use MACRS depreciation. Instead, you'll generally use straight-line depreciation over the vehicle's remaining useful life.
Because most vehicles are used for both personal and business purposes, you must allocate expenses based on your business-use percentage.
What Counts as Actual Car Expenses?
Actual vehicle expenses may include:
- Depreciation
- License fees
- Lease payments
- Registration fees (excluding license plate fees)
- Gasoline
- Insurance
- Repairs and maintenance
- Oil changes
- Garage rent
- Tires
- Tolls
- Parking fees
Parking Fees and Tolls
Even if you use the standard mileage rate, you can still deduct:
- Business-related parking fees
- Business-related tolls
These expenses are generally deductible in addition to your mileage deduction.
How to Enter Car and Truck Expenses in the Program
Standard Mileage Method
To enter vehicle mileage:
- Go to Federal
- Select Income (Select my forms)
- Choose Schedule C, Schedule E, or Schedule F
- Select Car and Truck Expenses
- Enter your business mileage information
Actual Expenses Method
To enter actual vehicle expenses:
- Go to Federal
- Select Income (Select my forms)
- Choose Schedule C, Schedule E, or Schedule F
- Open Depreciation
- Add your vehicle in the Assets section
- Select the Listed Property Information
- Choose the appropriate vehicle type from the drop-down menu
- Enter mileage and actual vehicle expenses