Mileage guide
Standard Mileage Rate vs. Actual Vehicle Expenses
By FlatMile ·
General US federal recordkeeping information, not individual tax advice. Tax treatment depends on your circumstances; consult a qualified adviser for your claim.
At a glance
For eligible business driving, the IRS generally lets a taxpayer calculate car expenses using either the standard mileage rate or actual vehicle costs. The standard method applies the relevant IRS rate to qualified business miles. The actual-expense method uses the business portion of eligible vehicle costs. The better result varies by vehicle and use, and the method you choose can affect later years—especially in the first year you use an owned car for business.
This overview is for US federal tax context and is aimed at self-employed drivers. Employees should distinguish tax deductions from employer reimbursement. Current federal law permanently disallows the miscellaneous itemized deduction for most unreimbursed employee travel expenses; specific exceptions and other deduction provisions remain. See the IRS explanation in Notice 2026-10. Ask a tax professional about your situation and state rules.
The two methods
Standard mileage rate. Multiply qualified business miles by the IRS rate that applies to when the miles were driven. The rate accounts for vehicle operating costs covered by the method. Under IRS rules, business parking fees and tolls may generally be claimed separately when otherwise deductible. For split-year 2026 rates, see the IRS mileage-rate guide; the rate does not determine whether a trip is deductible.
Actual expenses. Add eligible costs such as business-use portions of fuel, oil, repairs, insurance, registration, lease payments or depreciation, and other operating costs. If you also drive for personal reasons, you generally allocate costs based on business use. A mileage log and total annual mileage help establish that share, while receipts support the expenses.
| Question | Standard mileage | Actual expenses |
|---|---|---|
| Main calculation | Eligible business miles × applicable rate | Eligible vehicle costs × business-use share |
| Records to keep | Timely trip log and total vehicle mileage | Trip log, total mileage, receipts, and vehicle-cost records |
| Costs included | Operating costs covered by the rate | Actual eligible costs, allocated to business use |
| Choice constraints | First-year election for an owned vehicle; full lease period for a leased vehicle | Depreciation and other IRS limits may apply |
Choices that can carry forward
For an owned car, Publication 463 says you must choose the standard mileage method in the first year the car is available for business use if you want to use that method. In later years, you may generally switch between standard mileage and actual expenses, subject to applicable depreciation rules. If you start with the standard method and later switch to actual costs before the car is fully depreciated, you generally must use straight-line depreciation for the remaining useful life rather than MACRS.
For a leased car, if you choose the standard mileage rate, you generally must use it for the entire lease period, including renewals. There are also situations where the standard rate is not allowed, including certain depreciation elections, actual expenses previously claimed for a leased car, or using five or more vehicles for business at the same time. These rules are detailed in IRS Publication 463, “Choosing the standard mileage rate” and “Standard mileage rate not allowed”.
Because the first-year decision can limit future choices, compare methods before filing and get tax advice if depreciation, a lease, or vehicle ownership changes are involved. Do not choose a method only from a calculator’s headline amount; confirm eligibility and understand what the amount includes.
A fictional comparison
Imagine a sole proprietor drives 8,000 qualifying business miles in a year and has 18,000 total vehicle miles. Under the standard method, the calculation starts with 8,000 miles multiplied by the rate applicable to each trip’s date. Under the actual method, the proprietor totals eligible vehicle costs and generally allocates 8,000 ÷ 18,000, or about 44%, to business use. This is only a simplified illustration; not every cost is treated the same, and vehicle-specific tax limits can apply. It does not predict which method is better.
Whichever method you use, keep a timely log with the date, destination, purpose, and business miles, plus beginning and ending odometer readings or equivalent records for total use. The IRS explains the relevant fields and recordkeeping in Publication 463. FlatMile offers free automatic and manual drive logging. A subscription or eligible trial unlocks captured-drive details, business/personal classification, and PDF and CSV exports. The app does not choose a tax method or certify a deduction. You can download the free mileage log template and review your records with a tax professional.
Related guides
- What an IRS Mileage Log Should Record
- How Long Should You Keep Mileage Logs?
- How to prepare a mileage report for your accountant
- Mileage records for an electric car: miles, charging and method choice
- Leased-car mileage deductions: the records behind your method choice
- Parking and tolls with standard mileage: keep a separate receipt trail