Vehicle Tax Deduction Calculator
Compare IRS standard mileage rate vs actual expenses for business, medical, and charitable miles.
Returns which deduction method saves you more tax.
Vehicle tax deductions allow self-employed individuals and business owners to deduct the business-use portion of vehicle expenses from taxable income, reducing total tax owed.
Two IRS-approved methods:
Method 1 — Standard Mileage Rate: Deduction = Business Miles × IRS Standard Rate 2025 IRS rate: 67 cents per mile (70 cents for 2026 — check IRS.gov each year)
Method 2 — Actual Expense Method: Deduction = Total Vehicle Expenses × Business Use % Business Use % = Business Miles ÷ Total Miles × 100
Total expenses include: gas, insurance, registration, repairs, tires, lease payments, depreciation (or Section 179 if owned).
Worked example — comparing both methods: You drove 18,000 total miles in 2025. 11,000 miles were for business (61.1% business use). Total actual expenses: $9,200 (gas $2,400, insurance $1,800, repairs $800, depreciation $4,200)
Standard Mileage: 11,000 × $0.67 = $7,370 deduction Actual Expense: $9,200 × 61.1% = $5,621 deduction
In this case, the standard mileage rate wins by $1,749.
When actual expenses win:
- Very expensive vehicles (high depreciation)
- High insurance or maintenance costs
- Low mileage but high actual costs
Required records: IRS requires a mileage log with date, destination, business purpose, and miles. Apps like MileIQ or Everlance automate this. Standard mileage cannot be used after the first year if you previously claimed MACRS depreciation. Always consult a tax professional for your specific situation.