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Mileage deduction is a type of tax deduction you can claim each year on your IRS tax return. It is meant to cover all your expenses related to driving your own vehicle for business-related purposes.
Who can claim a mileage deduction?
If you are an employee, a sole trader or a business owner you might be eligible for a mileage deduction.
As an employee, you can claim a mileage deduction if your employer doesn’t reimburse you for your business vehicle expenses.
As self-employed you can claim all your car expenses in connection to conducting your business.
As a business owner, you can claim a deduction for the mileage payments you have made to your employees.
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The IRS sets a standard mileage rate each year that you can use to claim deductions based on the number of miles you’ve driven throughout the year. A mileage deduction based on the standard rate reimburses you for the car-related expenses of owning and operating your vehicle for the business portion of its use.
So, if you drive a vehicle solely for business, you will be able to get a mileage deduction for every mile you’ve driven throughout the year. If you drive your vehicle for business 50% of the time, you will be able to claim a mileage deduction for 50% of your miles driven and so on.
If you are self-employed, you can instead get a mileage deduction based on the actual expenses for owning and running your vehicle. Learn more about self-employed mileage deductions.
You will need to keep IRS-compliant records in order to claim a mileage deduction. You are required to log every trip you take, including its date, the mileage you’ve driven, the purpose of the journey and the total mileage for the year. In case the IRS audits you over your tax claims, these records will be vital in demonstrating how you calculated your mileage deduction.
Learn more about mileage deductions in the US according to your situation in our comprehensive IRS mileage guide.
Located outside of the US? See our other mileage guides:
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