Which is better — the standard mileage rate or actual expenses?

It depends on the vehicle. The standard mileage rate usually wins for fuel-efficient cars driven a lot of business miles, and it takes far less paperwork — you only track miles. The actual expense method tends to win for expensive vehicles, heavy repair or insurance costs, or lower-mileage years, because you deduct the business-use share of every real cost, including depreciation. The only reliable way to know is to keep the records for both methods in the first year and let the return show which produces the larger deduction.

Can I switch from the standard mileage rate to actual expenses later?

Only if you started with the standard mileage rate. If you use the standard mileage rate the first year the car is placed in service, you can switch to actual expenses in a later year (your depreciation then has to be straight-line). But if you claim actual expenses with Section 179 or accelerated depreciation in that first year, you are locked out of the standard mileage rate for that vehicle for as long as you own it. For a leased car, choosing the standard mileage rate commits you to it for the entire lease.

Is my commute to work deductible?

No. The IRS treats driving between your home and your regular place of work as a personal commuting expense, and commuting miles are never deductible under either method — regardless of distance. Business miles are trips between job sites, to clients or suppliers, or to a temporary work location. One important exception: if your home qualifies as your principal place of business, trips from that home office to clients or job sites become deductible business miles, because you are traveling between work locations rather than commuting.

What is the business mileage rate for 2026?

The IRS business standard mileage rate for 2026 started at 72.5 cents per mile for January 1 through June 30, then rose to 76 cents per mile effective July 1, 2026 — a mid-year increase driven by higher fuel prices and announced in Internal Revenue Bulletin 2026-29. A mid-year change is unusual, so a 2026 return must split business miles into the two periods by date. For comparison, the 2025 rate was 70 cents per mile for the whole year.

I own an S-Corp — how do I deduct my vehicle?

Differently from a sole proprietor. As an S-Corp owner you are an employee of your corporation, and employees generally cannot deduct unreimbursed business expenses on their personal returns — so paying the car costs yourself often produces no deduction. The correct approach is an accountable plan: the S-Corp reimburses you for business use at the standard mileage rate or documented actual costs. The reimbursement is deductible to the corporation and tax-free to you, and it still requires a real mileage log and substantiation.

Do I really need a mileage log?

Yes — it is the document the IRS asks for first when a vehicle deduction is questioned. You need a contemporaneous record of the date, miles, and business purpose of each trip, plus your total miles for the year so the business-use percentage can be calculated. A phone app, a spreadsheet you actually keep current, or a notebook in the glovebox all work. What does not survive an examination is an estimate reconstructed months later, so build the habit of logging trips as you go.

Business Vehicle Tax Deduction: Mileage vs. Actual

Business Vehicle Tax Deduction: Mileage vs. Actual ExpensesBy Timothy LeGendre, CPA · Florida License #AC62625 · Last reviewed 2026-08-06A Florida CPA's guide to the business vehicle tax deduction — standard mileage vs. actual expenses, the 2026 rates, and which method saves more.The IRS gives a business two ways to deduct a vehicle. The standard mileage rate is a flat amount per business mile — 72.5 cents for January through June 2026, then 76 cents from July 1 after a mid-year fuel adjustment (Internal Revenue Bulletin 2026-29); it was 70 cents for all of 2025. It folds in gas, maintenance, insurance, and depreciation, so you only track miles. The actual expense method deducts the business-use percentage of every real cost the vehicle incurs. Standard mileage tends to win for efficient, high-mileage vehicles; actual expenses win for expensive vehicles or low-mileage years. The first-year choice is decisive: use standard mileage the first year a car is in service to keep the ability to switch, because claiming Section 179 or accelerated depreciation year one locks you out of standard mileage for that vehicle permanently. Commuting is never deductible, but a qualifying home office turns former commuting into deductible business miles. Passenger autos at or under 6,000 lbs face luxury-auto depreciation caps ($20,200 first-year in 2025 with bonus depreciation); heavier vehicles escape them. S-Corp owners should reimburse the vehicle through an accountable plan rather than deduct it personally. A contemporaneous mileage log is the record the deduction depends on. Because Florida has no state income tax, the whole deduction is federal — and for the self-employed it also reduces self-employment tax.

Frequently asked questions

Which is better — the standard mileage rate or actual expenses?: It depends on the vehicle. The standard mileage rate usually wins for fuel-efficient cars driven a lot of business miles, and it takes far less paperwork — you only track miles. The actual expense method tends to win for expensive vehicles, heavy repair or insurance costs, or lower-mileage years, because you deduct the business-use share of every real cost, including depreciation. The only reliable way to know is to keep the records for both methods in the first year and let the return show which produces the larger deduction.
Can I switch from the standard mileage rate to actual expenses later?: Only if you started with the standard mileage rate. If you use the standard mileage rate the first year the car is placed in service, you can switch to actual expenses in a later year (your depreciation then has to be straight-line). But if you claim actual expenses with Section 179 or accelerated depreciation in that first year, you are locked out of the standard mileage rate for that vehicle for as long as you own it. For a leased car, choosing the standard mileage rate commits you to it for the entire lease.
Is my commute to work deductible?: No. The IRS treats driving between your home and your regular place of work as a personal commuting expense, and commuting miles are never deductible under either method — regardless of distance. Business miles are trips between job sites, to clients or suppliers, or to a temporary work location. One important exception: if your home qualifies as your principal place of business, trips from that home office to clients or job sites become deductible business miles, because you are traveling between work locations rather than commuting.
What is the business mileage rate for 2026?: The IRS business standard mileage rate for 2026 started at 72.5 cents per mile for January 1 through June 30, then rose to 76 cents per mile effective July 1, 2026 — a mid-year increase driven by higher fuel prices and announced in Internal Revenue Bulletin 2026-29. A mid-year change is unusual, so a 2026 return must split business miles into the two periods by date. For comparison, the 2025 rate was 70 cents per mile for the whole year.
I own an S-Corp — how do I deduct my vehicle?: Differently from a sole proprietor. As an S-Corp owner you are an employee of your corporation, and employees generally cannot deduct unreimbursed business expenses on their personal returns — so paying the car costs yourself often produces no deduction. The correct approach is an accountable plan: the S-Corp reimburses you for business use at the standard mileage rate or documented actual costs. The reimbursement is deductible to the corporation and tax-free to you, and it still requires a real mileage log and substantiation.
Do I really need a mileage log?: Yes — it is the document the IRS asks for first when a vehicle deduction is questioned. You need a contemporaneous record of the date, miles, and business purpose of each trip, plus your total miles for the year so the business-use percentage can be calculated. A phone app, a spreadsheet you actually keep current, or a notebook in the glovebox all work. What does not survive an examination is an estimate reconstructed months later, so build the habit of logging trips as you go.