IRS Mileage Deduction Basics
IRS Mileage Deduction Basics
This article covers the basics of how the IRS mileage deduction works. SmartMiles is not a tax advisor — consult a tax
professional for advice specific to your situation.
What is the mileage deduction?
If you use your personal vehicle for business, medical, charity, or certain moving purposes, the IRS lets you deduct a
set amount per mile driven. This is called the standard mileage deduction.
You claim it when you file your taxes. It reduces your taxable income.
Who qualifies?
- Self-employed individuals — If you drive for your business (freelancer, contractor, rideshare driver, delivery
driver, realtor, etc.), you can deduct business miles.
- Employees — Most W-2 employees cannot deduct mileage on their federal taxes (this changed with the Tax Cuts and Jobs
Act of 2017). However, your employer may reimburse you.
- Anyone — Medical, charity, and moving miles are available regardless of employment type, though eligibility rules
vary.
What counts as a deductible business trip?
- Driving from one work location to another.
- Driving to meet a client or customer.
- Driving to the bank, post office, or store for business supplies.
- Driving for rideshare or delivery work (the miles while you are available and looking for rides count too, depending
on your situation).
What does NOT count?
- Commuting — Driving from your home to your regular office and back. The IRS considers this personal.
- Personal errands combined with business trips — Only the business portion qualifies.
Exception: If you have a home office that qualifies as your principal place of business, trips from home to other work
locations may be deductible. Talk to a tax professional about this.
Standard mileage rate vs. actual expenses
The IRS gives you two ways to deduct vehicle expenses:
1. Standard mileage rate — Multiply your deductible miles by the IRS rate. Simple, no receipt tracking needed. This is
what SmartMiles calculates.
2. Actual expenses — Track all vehicle costs (gas, insurance, repairs, depreciation) and deduct the business-use
percentage. More complex but sometimes yields a larger deduction.
You generally choose one method for each vehicle and stick with it. Most people choose the standard mileage rate for
simplicity.
Record-keeping requirements
The IRS requires a contemporaneous record of each business trip, including:
- Date of the trip
- Starting and ending locations
- Business purpose
- Miles driven
SmartMiles creates this record automatically. By classifying your trips and adding notes, you are building an
IRS-compliant mileage log.
How to claim the deduction
- Self-employed: Report business mileage on Schedule C (Form 1040).
- Medical: Report on Schedule A (itemized deductions), subject to the 7.5% AGI threshold.
- Charity: Report on Schedule A (itemized deductions).
Disclaimer
This article is for general informational purposes only. Tax laws change and individual circumstances vary. Always
consult a qualified tax professional for advice about your specific situation.
