What Does Mileage Have to Do With Taxes?

If you run a business, mileage can quietly become one of the largest deductions you’re missing.

Think about it. Every time you drive to meet a client, pick up supplies, visit a job site, or stop by the bank for business purposes, those miles may be deductible.

But there’s a catch:
The IRS has very specific rules about what miles count and what miles don’t.

Let’s break it down.

What Is a Mileage Deduction?

A mileage deduction allows business owners and self-employed individuals to deduct the cost of using a vehicle for business purposes.

The IRS allows two methods for calculating the deduction:

1. Standard Mileage Rate
2. Actual Expense Method

Both methods are legitimate, but most small businesses use the standard mileage rate because it’s simpler and requires less paperwork.

The Standard Mileage Rate

The standard mileage rate is a set amount per mile determined by the IRS each year.

This rate already factors in vehicle costs like:

• Fuel
• Maintenance
• Repairs
• Insurance
• Depreciation

For example:

If you drive 1,000 business miles and the IRS rate is 70 cents per mile, your deduction would be:

1,000 × $0.70 = $700 deduction

Simple math, meaningful tax savings.

The Actual Expense Method

The second option is the actual expenses method.

Instead of using a flat rate, you track the real costs of operating your vehicle, including:

• Gas
• Oil
• Tires
• Repairs
• Insurance
• Registration
• Depreciation

Then you apply the percentage of business use to those expenses.

Example:
If your vehicle was used 60% for business, you could deduct 60% of your total vehicle expenses.

This method can sometimes produce a larger deduction — but it requires very detailed records.

Who Can Claim a Mileage Deduction?

Mileage deductions generally apply to:

✔️ Self-employed individuals
✔️ Business owners
✔️ Independent contractors
✔️ Certain agricultural or rental property activities

Charitable volunteers may also deduct mileage, although the rate is much lower.

One important update:
Most employees cannot deduct unreimbursed mileage due to changes under the Tax Cuts and Jobs Act.

What Miles ARE Deductible?

You can deduct miles driven for legitimate business purposes, including:

• Driving to meet clients or customers
• Traveling between job sites
• Visiting suppliers or vendors
• Running business errands like going to the bank or post office
• Driving to temporary work locations

If the trip has a clear business purpose, the miles likely qualify.

What Miles Are NOT Deductible?

Some miles are always considered personal, including:

❌ Commuting between home and your regular workplace
❌ Personal errands
❌ Vacation travel
❌ Personal trips, even if business is discussed casually

Commuting is the most common mistake taxpayers make.

Driving from home to your normal office is not deductible.

The IRS Requires Proper Mileage Records

Mileage deductions are one of the most frequently audited deductions, which means documentation matters.

The IRS expects contemporaneous records, meaning you track miles as they happen — not months later.

Your mileage log should include:

• Date of the trip
• Starting location
• Destination
• Business purpose
• Number of miles driven

Many business owners now use mileage tracking apps, which makes this much easier.

Tips to Maximize Your Mileage Deduction

If you want to get the most out of this deduction, consider these strategies:

✔️ Track every business mile
✔️ Combine multiple business stops into one trip
✔️ Use a mileage tracking app
✔️ Keep records throughout the year, not just at tax time

Small trips add up quickly.

Many business owners underestimate how much they actually drive for business.

Common Mileage Mistakes

Here are the most common mistakes the IRS sees:

❌ Claiming commuting miles
❌ Estimating miles instead of tracking them
❌ Missing business trips that should be deducted
❌ Poor recordkeeping

Mileage deductions can be extremely valuable — but only if they are properly documented.

Bottom Line

Mileage may seem like a small detail, but it can create substantial tax savings for business owners.

Understanding what qualifies, tracking your miles properly, and choosing the right deduction method can significantly reduce your taxable income.

And remember: if you’re not tracking your miles, you’re almost certainly leaving money on the table.

If you want help reviewing your deductions or making sure your mileage tracking is audit-ready, book a call with Lisa Brugman, EA & Associates.

With the right strategy, those miles can turn into real tax savings.