Car and Truck Expense Deduction: Standard Mileage vs. Actual Expenses

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 The car and truck expense deduction allows business owners to deduct certain costs associated with operating a vehicle for business purposes.

What Constitutes a Business Purpose?

Business purposes can include activities such as:

  • Getting from one workplace to another

  • Visiting clients or customers

  • Going to a business meeting away from your regular workplace

While it may be exciting to think about all the trips that could potentially qualify for this deduction, it’s important to distinguish business transportation from commuting.

Generally, driving between your home and your regular place of business is considered commuting, which is personal travel and does not constitute business transportation.

However, once you’ve determined that the trip has a legitimate business purpose, here’s the juicy part: there are two methods for calculating this deduction: the standard mileage rate or actual expenses.

The Standard Mileage Rate

The standard mileage rate allows you to deduct a flat amount for every qualifying business mile you drive.

For 2026, there are actually two different, and increasing, business mileage rates.

For the first half of 2026, from January through June, the standard mileage rate is 72.5 cents per business mile.

For the second half of the year, from July through December, the rate increases to 76 cents per business mile.

And if the increasing rate weren’t enough, you can also deduct business-related parking fees and tolls in addition to claiming the standard mileage deduction.

So you can keep on collecting those coins!

Actual Expenses

The second option for deducting car and truck expenses is to use the actual amounts paid.

With this method, you add up expenses associated with operating the vehicle, such as:

  • Gas

  • Oil

  • Repairs

  • Maintenance

  • Insurance

  • Registration fees

  • Depreciation or lease payments

But here’s a potential pitfall: if you use your vehicle for both business and personal purposes, you can only deduct the business portion.

For example, let’s say your total vehicle expenses for the year are $1,000, and you determine that you used the vehicle 30% for business and 70% for personal purposes.

Thirty percent of $1,000 is $300.

So, in this instance, you would only be able to deduct $300.

Hot Tip

If you own your vehicle and you want to retain the option of switching between the standard mileage method and the actual expense method, you need to choose the standard mileage rate in the first year the vehicle is put to business use.

That way, in subsequent years, you can determine which method is most advantageous and keep more money in your pocket.

There are, of course, exceptions and additional rules that can affect those options, so it’s always a good idea to consult with a licensed tax professional.

Now that we know there are two equally legitimate ways to deduct your car and truck expenses, in next week's article we’ll learn how to properly document those expenses and miles so you can substantiate and defend your deductions in case of an audit.

So, if you haven’t already, make sure to follow and subscribe so you can continue learning how to keep more money in your pocket!

This article is intended for educational purposes only and does not constitute individualized tax advice. You should always consult with a licensed tax professional to determine what is appropriate for you and your business.

Location: United States

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