Business Mileage Deduction Calculator
The IRS allows self-employed individuals, employees who are not reimbursed by their employer, and certain other taxpayers to deduct vehicle expenses incurred for business travel using either the standard mileage rate or the actual expense method. For 2025, the standard mileage rate for business use is 70 cents per mile, as set by IRS Rev. Proc. 2024-40. The standard rate is designed to cover the full cost of operating a vehicle, including fuel, insurance, maintenance, repairs, and depreciation, so if you use the standard rate, you cannot also deduct these individual expenses separately. The alternative actual expense method deducts the pro-rated share of all actual vehicle costs (fuel, oil, insurance, registration, repairs, and depreciation or lease payments) based on the business-use percentage of total miles driven during the year. If you switch from the actual expense method with accelerated depreciation to the standard rate in a later year, restrictions apply. You must keep contemporaneous records of all business trips, including the date, destination, business purpose, and odometer reading, to substantiate the deduction. This calculator computes the standard mileage deduction at the 2025 IRS rate on total business miles, computes the actual expense deduction using your vehicle costs and business-use percentage, and compares both methods so you can choose the larger deduction.
For 15,000 business miles out of 22,000 total miles, using the standard mileage method gives a deduction of --.
Standard mileage method vs actual expenses
The IRS offers two methods to calculate vehicle deductions: standard mileage and actual expenses. The standard mileage method is simpler: multiply business miles by $0.70 per mile (2025 rate). The actual expense method requires tracking all costs and multiplying by business use percentage.
Standard method:
Deduction = business miles x $0.70
Actual method:
Business use % = business miles / total miles
Total costs = gas + insurance + repairs + other + depreciation
Deduction = total costs x business use %
Depreciation (luxury auto limits, 2025):
Year 1: $12,400; Year 2: $19,800; Year 3: $11,900; Year 4+: $7,160
Worked example
15,000 business miles out of 22,000 total, standard method:
- Business use %: 15,000 / 22,000 = 68.2%
- Standard rate: $0.70 per mile
- Deduction: 15,000 x 0.70 = $10,500
Actual expense example
Same miles, with operating costs gas $3,000, insurance $1,800, repairs $600, other $400, vehicle cost $35,000, Year 1:
- Operating costs: 3,000 + 1,800 + 600 + 400 = $5,800
- Year 1 depreciation (luxury cap): $12,400
- Total costs: 5,800 + 12,400 = $18,200
- Business use %: 15,000 / 22,000 = 68.2%
- Deduction: 18,200 x 0.682 = $12,415
Record keeping and IRS audit risk
The IRS closely scrutinizes vehicle mileage deductions. You must keep contemporaneous written records showing the date, destination, business purpose, and miles driven. A simple odometer reading at year-end is not sufficient. Use a mileage app, a written log, or a spreadsheet updated regularly. The Tax Court has disallowed large mileage deductions where taxpayers could not produce a reliable log.
For the business use percentage calculation, divide your business miles by total miles driven (business plus personal). Do not include commuting miles (home to office) as business miles unless you meet specific tests (e.g., you have an office outside your home where you spend significant time).
The standard mileage method is generally less likely to be challenged because it uses an IRS-set rate and requires less documentation of actual costs. The actual expense method can yield higher deductions but requires meticulous record keeping and depreciation calculations.
Business mileage: frequently asked questions
What is the 2025 standard mileage rate for business travel?
The IRS 2025 standard business mileage rate is $0.70 per mile. This rate is set by the IRS in an annual notice and includes depreciation, fuel, oil, insurance, and maintenance. You simply multiply your business miles by the rate to calculate your deduction. The rate has increased from $0.67 in 2024 due to higher vehicle operating costs. See IRS Notice 2025-5 for the complete 2025 rates.
What is the difference between standard mileage and actual expense method?
The standard mileage method multiplies your business miles by a fixed rate ($0.70 in 2025) to calculate your deduction. The actual expense method requires you to track all vehicle costs (gas, insurance, repairs, depreciation) and calculate the business use percentage (business miles / total miles). The deduction is total costs times the business use percentage. Generally, whichever method gives a higher deduction is preferable, though you cannot switch from actual to standard after the first year if you used actual.
Can I use both standard mileage and actual expense methods?
No, you must choose one method per vehicle per year. However, you can use standard mileage for one vehicle and actual expenses for another. Once you elect to use actual expenses for a vehicle, you cannot switch back to standard mileage for that vehicle in later years (with some exceptions for certain assets). Choose the method that maximizes your deduction in the first year.
What other standard mileage rates does the IRS provide?
The IRS provides different rates for different purposes: Business ($0.70 in 2025), Medical and Charitable purposes ($0.21 for moving for active duty military, $0.14 for charity). Note that charitable mileage ($0.14) is set by statute (IRC Section 170(i)) and does not change as frequently. The rates also vary for years: use the rate in effect for the month you drive.
How is the luxury auto depreciation limit applied?
If you use the actual expense method, depreciation is calculated using MACRS. The IRS imposes annual depreciation caps on luxury vehicles to prevent excess deductions on expensive cars. For 2025, the caps are Year 1: $12,400, Year 2: $19,800, Year 3: $11,900, Year 4 and beyond: $7,160 per year. These caps apply to the vehicle overall, not just the business use portion. Check IRS Rev Proc 2024-37 for the current year rates.
Must I keep records of my business mileage?
Yes, the IRS requires contemporaneous written records of your business mileage. You must maintain a mileage log with the date, destination, business purpose, and miles driven. Simply recording odometer readings at the start and end of the year is not sufficient. The Tax Court has disallowed mileage deductions where the taxpayer could not produce a mileage log. An app or written log updated regularly is essential.
Official sources
- 2025 standard mileage rates: IRS Notice 2025-5.
- Vehicle deduction rules: IRS Publication 463 (Travel, Gift, and Car Expenses).
- Luxury auto depreciation limits: IRS Rev Proc 2024-37.
Reviewed by the CalculatorHub team, edited by James Graham, 13 June 2026. See our methodology. General information, not financial advice. Keep detailed mileage records.