When claiming car and truck expenses, the IRS allows taxpayers to use either the standard mileage rate or actual expenses.
When can the standard mileage rate be used?
- If you elect to use the standard mileage rate in the first year you place your vehicle in service, you may switch back and forth between mileage and actual expenses. However, you will need to track the depreciation taken under the actual expenses method.
- If you use the standard mileage rate for a leased vehicle, you must use it for the entire lease period.
- For 2022, standard mileage rate increases to 58.5 cents for miles incurred from January 1 - June 30 and 62.5 cents for miles incurred from July 1 - December 31.
- You should maintain a mileage log (example in Publication 463)
When is the standard mileage amount not allowed?
You can’t use the standard mileage rate if you:
- Use five or more cars at the same time
- Claimed a depreciation deduction for the car using any method other than straight
line (See Publication 463 for more information) - Claimed a section 179 deduction (Publication 463) on the car;
- Claimed the special depreciation allowance on the car (Publication 463); or
- Claimed actual car expenses after 1997 for a car you leased.
When can actual expenses be used?
- If you elect to use actual expenses in the first year you place the vehicle in service, you must continue to use actual expenses for the life of the vehicle.
- If you used the standard mileage rate in the first year you placed the vehicle in service and change to the actual expenses method in a later year, you can’t depreciate your car under the MACRS rules. You must use straight line depreciation over the estimated remaining useful life of the car. See Publication 463 for details.
- You must allocate the expenses between personal use and business use
What are considered actual car expenses?
Actual car expenses include the following:
- Depreciation
- Licenses
- Lease payments
- Registration Fees (not plates)
- Gas
- Insurance
- Repairs
- Oil
- Garage Rent
- Tires
- Tolls
- Parking Fees
Program Entry
If using Standard Mileage, go to:
- Schedule C or Schedule F
- Car and Truck Expenses
If using Actual Expenses, go to:
- Schedule C or Schedule F
- Depreciation
- List your vehicle information in the Assets section
- Click the Listed Property Information tab and select your vehicle type from the drop-down list. Enter your mileage and your actual expenses here.
For more information regarding your Car and Truck Expenses, see Publication 463.