Vehicle Deductions - Mileage Rate or Actual Expenses

🚘 Should You Use the IRS Standard Mileage Rate or Actual Expense Method?

If you use your personal vehicle for business, the IRS allows you to deduct the costs — but you have to choose between two methods: the standard mileage rate or the actual expense method. Each has pros and cons depending on how much you drive and your vehicle's costs.

Whichever method you choose, the IRS requires that you track your mileage accurately. Apps like MileIQ, Everlance, or TripLog make it easy by automatically logging your drives and helping you separate business from personal trips — a must for both audit protection and maximizing your deduction.

Here’s a quick comparison to help you decide:

🚗 Standard Mileage Rate Method

Pros

Simple to calculate

Minimal recordkeeping

Easy to apply year after year

Great for high-mileage, low-cost vehicles

Cons

May result in a smaller deduction if costs are high

No deduction for actual costs like insurance or repairs

Must be used in the first year if you want to keep it for that vehicle

Doesn’t capture full depreciation or actual expenses

✅ Mileage Tracking Required

• Date of trip

• Purpose (business use)

• Start and end locations

• Total miles driven

🛠️ Actual Expense Method

Pros

Simple to calculate

Minimal recordkeeping

Easy to apply year after year

Great for high-mileage, low-cost vehicles
Use a mileage tracker app to log:

Cons

May result in a smaller deduction if costs are high

No deduction for actual costs like insurance or repairs

Must be used in the first year if you want to keep it for that vehicle

Doesn’t capture full depreciation or actual expenses

📌 Mileage tracking still required
Use a mileage tracker app to log:

• Date of trip

• Purpose (business use)

• Start and end locations

• Total miles driven

• Business-use percentage (business miles ÷ total miles)

💡 Bottom Line:

• Choose mileage method for ease and high mileage, low-cost vehicles.

• Choose actual expenses for larger deductions on expensive or high-maintenance vehicles — but be ready for more recordkeeping.

If you have questions please contact info@bluetaxplan.com