Vehicle Depreciation Per Mile Calculator
Find your true depreciation cost per mile by entering the vehicle purchase price, expected resale value, and total miles you expect to drive during ownership. The calculator shows depreciation per mile, total depreciation, annual depreciation (based on your annual mileage), and the depreciation as a percentage of purchase price. This is the largest hidden cost for most vehicle owners.
Depreciation per mile formula
Total depreciation = Purchase_price - Resale_value
Depreciation per mile = Total_depreciation / Total_miles
Annual depreciation = Depreciation_per_mile x Annual_miles
Depreciation % = Total_depreciation / Purchase_price x 100
This uses straight-line depreciation spread over miles driven, which is the basis for the depreciation component included in the IRS standard mileage rate (IRS Revenue Procedure, published annually).
Typical depreciation rates by vehicle age
- Year 1: a new vehicle loses roughly 15 to 25% of its value in the first year, partly from the drive-off-the-lot discount and partly from actual depreciation.
- Years 2 and 3: additional 10 to 15% per year. A 3-year-old vehicle is often worth 50 to 60% of its new price.
- Years 4 and 5: depreciation slows to around 7 to 12% per year as the vehicle reaches the steeper part of the curve.
- Years 5 and beyond: rates slow further. Some vehicles bottom out and hold value well. Trucks and SUVs historically hold value better than sedans.
- Electric vehicles: depreciation rates vary widely and depend heavily on battery health, range, and competing model releases.
Vehicle depreciation calculator: frequently asked questions
What is vehicle depreciation?
Vehicle depreciation is the reduction in a vehicle's market value over time and with use. It is typically the largest single component of vehicle ownership cost. A new vehicle loses approximately 20% of its value in the first year and around 50 to 60% over five years, though exact rates vary widely by make, model, and market conditions.
How is depreciation per mile calculated?
Depreciation per mile = (Purchase price - Expected resale value) / Total miles driven over the ownership period. The IRS uses a similar straight-line depreciation concept in its standard mileage rate, which includes a depreciation component. For 2025, the IRS standard mileage rate for business use was 70 cents per mile, a portion of which covers depreciation.
What is the IRS standard mileage rate?
The IRS standard mileage rate is an optional simplified method for deducting vehicle business expenses. For 2025, it was 70 cents per mile. This rate is set annually by the IRS and bundles depreciation, insurance, maintenance, and fuel into a single per-mile rate. The rate is published each December for the following year in an IRS Revenue Procedure.
How do I estimate future resale value?
Resale value depends on make, model, condition, mileage, and market demand. You can look up current used-car values for similar vehicles at the same age and mileage using NADA Guides (NADAguides.com) or the Kelley Blue Book. This calculator uses your estimated resale value as a user-editable input so you can model different scenarios.
Why is depreciation often ignored when calculating car costs?
Depreciation is an unrealised cost until the vehicle is sold, so many owners overlook it. However, it is the largest cost category for most new-vehicle owners, often exceeding fuel and insurance combined. The AAA annual Your Driving Costs study consistently shows depreciation accounting for 30 to 40% of total ownership cost for a new mid-size sedan.
Official sources
- IRS Standard Mileage Rates: irs.gov/tax-professionals/standard-mileage-rates.
- AAA Your Driving Costs: aaa.com newsroom: driving costs.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.