How does the standard mileage deduction work?

Track your business miles and multiply by the IRS rate — 70 cents per mile for 2026. For example, 12,000 business miles × $0.70 = an $8,400 deduction. You only need a mileage log; there's no tracking of gas, maintenance, or insurance receipts.

When does standard mileage beat actual expenses?

Standard mileage tends to win when you drive a lot of business miles, you drive an efficient or cheap-to-run car, or you simply don't want to track receipts — the hours saved are worth real money.

Can I switch between standard mileage and actual expenses?

You must use standard mileage in the first year you place the vehicle in service if you ever want to use it at all — using actual expenses in year one locks you into actual expenses for that vehicle forever. If you start with standard mileage, you can switch to actual expenses in a later year, but you then can't switch back to standard for that vehicle.

✓ Reviewed for accuracy by the PayoutMath team — US sellers and creators who use these platforms · Last verified 10 May 2026

Tax guide

Mileage vs actual vehicle expenses

The 70¢/mile standard rate vs. actual expenses — which saves more depends on your car, your miles, and a lock-in rule.

Last updated 10 May 2026

Self-employed drivers — rideshare workers, real estate agents, freelance photographers, sellers who do market runs, anyone with a side hustle that involves a car — get to deduct their vehicle expenses from business income. The IRS gives you two methods. One is famously simple. The other often saves more. Picking wrong in year one can cost you money for the entire life of the car.

The two methods

Standard mileage rate. Multiply your business miles by the IRS rate per mile. For 2026 the rate is 70 cents per mile (subject to mid-year adjustments). That number is supposed to cover gas, oil, depreciation, insurance, registration, and maintenance — all bundled.

Actual expenses. Track every vehicle cost — gas, insurance, registration, repairs, depreciation, lease payments — and deduct the business-use percentage of the total.

You pick one. There are some lock-in rules (more on these below). Then you do the math each year and claim the deduction on Schedule C.

How standard mileage works

Track your business miles. Multiply by 70 cents. That's the deduction.

Worked example: Dana drives for Uber Eats, 12,000 business miles in 2026.

12,000 × $0.70 = $8,400 deduction.

That's it. No tracking gas receipts, no maintenance receipts, no insurance bills. Just a mileage log book (paper or app) showing the dates, destinations, and miles driven for each business trip.

Plus you can add: parking fees and tolls related to the business driving (these are on top of the standard rate, not included in it). Interest on a car loan, prorated for business use. State and local property taxes on the vehicle, prorated.

How actual expenses works

Track everything you spend on the car — gas, oil changes, tires, repairs, insurance, registration, lease or depreciation. Calculate your business-use percentage. Multiply.

Worked example: Dana again, but this time using actual expenses.

2026 vehicle expenses:

Gas: $3,200
Insurance: $1,800
Maintenance and repairs: $900
Registration: $200
Tires: $600
Depreciation: $4,500 (standard 5-year MACRS on a $30k car, assuming year 2)

Total vehicle expenses: $11,200

Business miles: 12,000. Total miles: 18,000. Business use = 12,000 ÷ 18,000 = 67%.

$11,200 × 67% = $7,504 deduction.

Standard mileage wins by about $900 in this scenario.

When standard mileage wins

Standard mileage tends to win when:

You drive a lot of business miles. The 70¢/mile rate adds up faster than actual expenses for high-mileage drivers.
You drive an efficient or cheap-to-run car. A used Honda Civic with paid-off financing has low actual expenses; the standard rate often beats them.
You don't want to track receipts. Genuinely. The hours saved are worth real money.

When actual expenses wins

Actual expenses tends to win when:

You drive an expensive vehicle. Higher depreciation, higher insurance, premium maintenance.
You drive few business miles in an expensive car. If business is 30% of your driving but the car costs $15k/year to operate, actual expenses gives you $4,500 vs. the standard rate's smaller mileage-based amount.
You bought the car new. First-year depreciation under MACRS or Section 179 can be substantial.
The car gets bad fuel economy. A truck or SUV used for hauling inventory racks up real gas expense that the standard rate undervalues.

The lock-in rules

Two important constraints:

1. You must use standard mileage in the FIRST year you place the vehicle in service for business if you ever want to switch to it. If you use actual expenses in year one, you're locked into actual for that vehicle forever.

2. If you started with standard mileage, you can switch to actual any future year — but if you do, you're then locked into actual for that vehicle going forward (no switching back to standard).

This is why year-one method choice matters. The conservative play if you're unsure: start with standard mileage. It keeps the door open to switch to actual later if it makes more sense (e.g. when the car gets older and repair costs rise).

The leasing twist

If you lease your car (rather than own), there's an additional rule: once you pick a method for a leased vehicle, you can't change for the entire lease term.

Standard mileage with a lease usually wins because the calculation captures the lease cost implicitly without requiring you to value the lease as an "expense" in a complex way.

Documentation requirements

Whichever method you pick, you need a contemporaneous mileage log. "Contemporaneous" means written at the time of the trip, not reconstructed in April. The IRS specifically targets reconstructed logs in audits.

What the log needs:

Date of each business trip
Destination (or at least: starting and ending odometer reading)
Business purpose (one phrase: "client meeting", "supply pickup", "delivery to post office")
Miles driven for that trip

You can use a paper mileage log book or an app (MileIQ, Stride, or Hurdlr). Apps work via GPS and auto-categorize trips, which is faster than paper if you drive more than a few business miles a week.

For actual expenses, you also need: every gas receipt, every maintenance receipt, every insurance bill, every repair invoice, plus your registration and depreciation calculation. A receipt scanner or app is mandatory unless you want a shoebox of receipts.

Worked decision tree

If you're trying to pick a method and don't want to do the full math both ways:

Drive a 5+ year old car worth under $15k → standard mileage almost always wins.
Drive a brand new car worth over $40k → actual expenses likely wins (especially year one with depreciation).
Drive 10,000+ business miles a year → run both. Standard usually wins at high mileage.
Drive under 5,000 business miles in an expensive car → actual expenses likely wins.
Lease the car → standard mileage is usually the safer pick.
You hate paperwork → standard mileage. The hours saved are worth real money.

One thing the IRS also won't let you do

You can't deduct commuting miles. Driving from home to your regular workplace is not deductible, even if you're self-employed. The miles only count if they're between business locations or for business errands (client meetings, supply pickups, deliveries, etc.).

If your home is your principal place of business (see the home office deduction guide), all driving from home for business purposes is deductible — there's no "commute" because you don't commute. This is one of the indirect benefits of qualifying for the home office deduction.

How this fits into your tax bill

The mileage or vehicle expense deduction reduces your Schedule C net income. Lower net income means lower self-employment tax (FICA) AND lower federal income tax. So a $8,400 mileage deduction at a 22% federal bracket plus 15.3% SE tax saves roughly $3,100 in real after-tax money.

Run your full tax picture in the self-employment tax calculator with and without the deduction to see the actual dollar effect on your year.

Two tools that make whichever method you choose practical throughout the year: an automatic mileage tracker records every trip without manual logging, and accounting software that imports the log puts the deduction in the right Schedule C category automatically.