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Mileage deduction. Standard rate vs. actual cost.
If you drive for self-employment, the mileage deduction is real money — but only if you tracked it. This guide covers what miles count, the standard IRS rate vs. actual-cost method, what records you actually need to keep, and the common mistakes (commuting miles aren't deductible, and 'I drove 12,000 miles' isn't enough documentation).
7 min read· Twin Cities, Minnesota
The short version
- Who can deduct: self-employed people, business owners, 1099 contractors, S-corp owners (via accountable plan reimbursement). W-2 employees: no (with rare exceptions).
- 2026 standard rate: roughly $0.70/mile (the IRS updates this annually — check current year). Multiply business miles by the rate.
- What counts: driving from your home or office to a client / job site, between job sites, to the bank for business, to the post office for business mail.
- What doesn’t: commuting miles from home to a regular office, personal errands even if you mention business stops along the way.
- Records required: date, miles, start/end locations, business purpose. The IRS doesn’t accept “I drive about X miles per week” in an audit.
Standard mileage vs. actual cost method.
The IRS lets you choose between two methods to deduct vehicle expenses for business:
Standard mileage rate. Multiply business miles by the IRS’s annual rate. The rate already builds in gas, insurance, depreciation, repairs, oil, tires, registration. You don’t deduct those separately. Tolls and parking are still deductible on top.
Actual-cost method. Track every dollar spent on the vehicle (gas, insurance, repairs, depreciation, lease payments, registration), then deduct the business-use percentage. Higher-cost vehicles (trucks, vans, luxury cars) often come out ahead with this method.
The choice locks in for that vehicle when you start using it for business: if you choose actual the first year, you can switch to standard later. If you choose standard the first year, you can switch to actual later for that vehicle — but the math gets complicated.
For most rideshare drivers, real estate agents, freelancers who drive a sedan: standard mileage wins. For contractors with a heavy truck or van: actual-cost often beats it.
What miles count as deductible.
The miles that count:
- From your home (or office) to a client site, customer location, or job site
- Between job sites or client meetings in one day
- To the bank for business deposits, the post office for business mail, the office supply store
- To a continuing-education event or industry conference (if ordinary and necessary for your business)
- Driving between your home office and a temporary work location (the “home office” rule helps when you qualify for the home office deduction — see that guide)
What doesn’t count:
- Commuting miles. From your home to a regular workplace (the same office you go to every day) is personal commuting. Not deductible.
- Personal errands. Grocery store, kid’s school, doctor — even if you mention you stopped for “business reasons” on the way.
- Personal miles on a business trip (the evening drive to a restaurant after a client meeting is personal).
The records the IRS actually wants.
A contemporaneous log — meaning you wrote it at the time of the drive, not reconstructed later. The IRS specifically requires:
- Date of the drive
- Total miles for the trip
- Business purpose (one short phrase per trip is enough)
- Destination (often just “client X” or the city if unidentifiable)
- Beginning and ending odometer for the year (so the business-use percentage is verifiable)
Apps that auto-track via GPS (MileIQ, Stride, TripLog, Everlance, Hurdlr) handle this cleanly and produce IRS-compliant logs. The free tier of any of them is enough for most self-employed people. If you’re still keeping a spreadsheet or paper log, the apps usually pay for themselves in missed miles caught.
What to do if you have no log.
If you didn’t track and the year is over, the IRS technically requires contemporaneous records — but in practice, a reasonable reconstruction often works in an audit if it’s supported by other records:
- Calendar entries showing client meetings with addresses
- Invoices showing where work was performed (geographic location)
- Fuel receipts showing dates and locations (proves where you were)
- Oil-change records showing odometer readings (year-start vs. year-end mileage)
- Phone GPS history (some clients have pulled this when absolutely needed)
Reconstructed logs are weaker than real-time logs in an audit, but better than zero. The IRS will sometimes accept a reasonable estimate; they’ll often disallow part of the deduction; rarely will they disallow all of it if there’s credible supporting evidence.
Going forward: install a tracking app the day you read this. Going forward beats going back.
The S-corp owner mileage twist.
If you operate as an S-corp, the rules are different. You can’t deduct mileage as a business expense on Schedule C — you don’t have a Schedule C anymore. Instead:
- Set up an accountable plan with your S-corp (a written policy that the corporation reimburses you for business miles at the IRS rate)
- Submit a monthly or quarterly mileage report to the corp
- The corp reimburses you — tax-free to you, deductible to the corp
- Keep the same contemporaneous records described above
The accountable plan is the cleanest setup. Without one, the S-corp can’t deduct mileage and you can’t either — the money gets stranded.
Behind on the mileage log?