Malcolm Rivera
If you use your car for business, charity, medical, or moving purposes, you may be able to deduct the mileage on your taxes. The standard mileage rate method is a simple way to calculate the deduction for the business use of your car. It does not require you to track individual purchases and save receipts. Instead, you simply keep track of your business and personal mileage for the tax year. The standard mileage rates for 2025 are: Self-employed and business: 70 cents/mile; Charities: 14 cents/mile; Medical: 21 cents/mile; Moving (military only): 21 cents/mile.
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What You'll Learn
Mileage rates for business, charity, medical or moving purposes
If you use your car for business, charity, medical, or moving purposes, you may be able to deduct the expenses based on the mileage used for that purpose. The standard mileage rates for 2025 are:
- Self-employed and business: 70 cents per mile
- Charities: 14 cents per mile
- Medical: 21 cents per mile
- Moving (military only): 21 cents per mile
The standard mileage rate method and the actual expense method are the two most common ways to calculate the amount of your deductible car expenses. If you are eligible for both methods, you may want to calculate your deduction using both methods before selecting one to maximize your deduction.
To use the standard mileage rate, you must own or lease the car and meet the following requirements:
- You must not operate five or more cars at the same time, as in a fleet operation.
- You must not have claimed a depreciation deduction for the car using any method other than straight-line.
- You must not have claimed a Section 179 deduction on the car.
- You must not have claimed the special depreciation allowance on the car.
For a car you own, you can choose to use the standard mileage rate in the first year it is available for business use. In later years, you can choose between the standard mileage rate or actual expenses. For a leased car, you must use the standard mileage rate method for the entire lease period if you choose the standard mileage rate.
Actual expenses refer to the costs of operating the car for the business-use portion of the overall car use. This includes gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments). It is important to note that other car expenses for parking fees and tolls attributable to business use are separately deductible, regardless of the chosen method.
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Deducting vehicle sales tax
The following information constitutes general guidance and does not contain personalised tax advice. For specific tax advice, please consult a professional tax advisor.
If you use your car for business, charity, medical, or moving purposes, you may be able to deduct vehicle sales tax from your tax returns. There are two methods for calculating the amount of your deductible car expenses: the standard mileage rate method and the actual expense method.
Standard Mileage Rate Method
To use the standard mileage rate method, you must own or lease the car and meet the following requirements:
- You must not operate five or more cars simultaneously.
- You must not have claimed a depreciation deduction for the car using any method other than straight-line depreciation.
- You must not have claimed a Section 179 deduction or the special depreciation allowance on the car.
Actual Expense Method
The actual expense method involves calculating the actual cost of operating the car for the portion of its use that is for business purposes. This includes expenses such as gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation or lease payments. Other car expenses, such as parking fees and tolls attributable to business use, can be separately deducted, regardless of whether you use the standard mileage rate or actual expense method.
Sales Tax Deduction
You can deduct the sales tax on a vehicle purchase, but only the state and local sales tax. It is important to note that this deduction is generally beneficial for taxpayers in states without income tax. You will only want to deduct sales tax if you paid more in state and local sales tax than you paid in state and local income tax. Additionally, the rate of sales tax you paid must be the same as the general sales tax rate; otherwise, you can only deduct the general sales tax rate.
There is a limit of $10,000 ($5,000 if married filing separately) on the amount of sales tax you can claim from 2018 to 2025. This limit applies to the total amount a taxpayer can claim for real property taxes, personal property taxes, and state and local income taxes (or general sales tax if elected).
To deduct vehicle sales tax, you can use one of the following methods:
- Save your sales receipts and deduct the actual sales tax throughout the year.
- Use the IRS sales tax tables or the IRS sales tax deduction calculator to figure out your deduction.
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Standard mileage rate method
The Internal Revenue Service (IRS) offers two ways of calculating the cost of using a vehicle for business: the standard mileage rate method and the actual expense method. The standard mileage rate method is a simplified way to calculate the cost of using your vehicle for business, charitable, medical, or moving purposes. This method uses a set rate per mile to calculate your deduction, which is adjusted annually by the IRS based on factors such as gas prices, vehicle maintenance costs, and depreciation.
To use the standard mileage rate method, you must keep track of the miles you drive for business, charitable, medical, or moving purposes throughout the tax year. You can then multiply the number of miles driven for each category by the corresponding standard mileage rate set by the IRS for that year. For example, if you drove 4,500 miles for business purposes in 2025, you could deduct 4,500 multiplied by 0.70 cents per mile, resulting in a total deduction of $3,150.
It is important to note that you must own or lease the car to use the standard mileage rate method. Additionally, you must not operate five or more cars simultaneously, claim a depreciation deduction using any method other than straight-line depreciation, or claim a Section 179 deduction or the special depreciation allowance on the car. If you lease a car, you must use the standard mileage rate method for the entire lease period, including renewals, if you choose this method.
The standard mileage rate method offers a simpler and less error-prone way to calculate deductions compared to the actual expense method. With the standard mileage rate method, you only need to track the miles driven for qualifying purposes and keep a simple log. There is no need to save receipts for expenses such as gas, maintenance, or insurance. On the other hand, the actual expense method requires you to itemize and save receipts for various vehicle-related costs.
When deciding between the standard mileage rate method and the actual expense method, it is recommended to calculate your expenses using both methods and choose the one that yields the larger deduction and greater tax benefit. It is important to note that you must use the same method for the same vehicle throughout the year and that the standard mileage rate method should be chosen in the first tax year you use your vehicle for business.
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Actual expense method
I could not find information on what mileage constitutes a new car for taxes. However, I found information on the actual expense method for deducting car expenses.
The Internal Revenue Service (IRS) offers two ways of calculating the cost of using your vehicle for business: the standard mileage rate method and the actual expense method. If you qualify to use both methods, you may want to calculate your deduction both ways and choose the method that gives you the largest deduction.
The actual expense method requires you to determine the actual cost of operating your car for business use. This includes expenses such as gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments) attributable to the portion of the total miles driven that are for business. To calculate your deduction, add up all the money you spent operating your vehicle for business and multiply that figure by the percentage of the vehicle's business use. For example, if half your mileage is for business, multiply the total expenses by 50%. Other car expenses for parking fees and tolls attributable to business use are separately deductible, whether you use the standard mileage rate or actual expense method.
If you use the actual expense method in the first year of operating your vehicle for business, you must continue to use this method for that specific vehicle in future years. If you used the standard mileage rate in the first year and change to the actual expense method in a later year, you must use straight-line depreciation over the estimated remaining useful life of the car. The Modified Accelerated Cost Recovery System (MACRS) is the only depreciation method that can be used by car owners to depreciate any car placed in service after 1986. There are limits on how much depreciation you can deduct.
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Mileage reimbursement
If you use your car for business, charity, medical, or moving purposes, you may be able to take a deduction based on the mileage used for that purpose. The standard mileage rates for 2025 are: self-employed and business: 70 cents/mile; charities: 14 cents/mile; medical: 21 cents/mile; and moving (military only): 21 cents/mile.
If you're an Armed Forces reservist, a qualified performing artist, or a fee-basis state or local government official, complete Form 2106, Employee Business Expenses, to figure out the deductions for your car expenses. You can generally figure out the amount of your deductible car expense using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, you may want to calculate your deduction both ways before choosing a method to see which one gives you a larger deduction.
To use the standard mileage rate, you must own or lease the car and not operate five or more cars simultaneously. You must not have claimed a depreciation deduction for the car using any method other than straight-line, and you must not have claimed a Section 179 deduction or the special depreciation allowance on the car. For a car you lease, you must use the standard mileage rate method for the entire lease period, including renewals, if you choose the standard mileage rate.
To use the actual expense method, you must determine the actual cost of operating the car for the portion of the overall use that is for business. This includes gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments) attributable to the business miles driven. Other car expenses for parking fees and tolls attributable to business use are separately deductible, whether you use the standard mileage rate or actual expense method.
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Frequently asked questions
The standard mileage rate method is a way of calculating the deduction for the business use of your car. It does not require you to track individual purchases and save receipts. Instead, you simply keep track of your business and personal mileage for the tax year.
The actual expense method allows you to deduct the actual cost of operating your vehicle from your taxable income. Using this method, you add up your vehicle-related expenses, like gas, repairs, car insurance, and depreciation. Then, you multiply this total by the percentage of business use.
You can calculate your expenses using both methods and then choose the one that yields the larger deduction and greater tax benefit.
The mileage deduction is available to self-employed or small business owners, including independent contractors, such as drivers for rideshare services.
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