If you use a car or truck for your business, you may be able to deduct allowable vehicle costs. For a Schedule C filer, the deduction generally goes on Line 9. There are two ways to calculate it — the standard mileage rate and the actual-expense method — and they can produce different numbers.
The method you choose affects the result, and each method has its own recordkeeping requirements. Here is how each works.
First: Only the Business Portion Counts
Whichever method you use, you can only deduct the business-use portion of your driving. Commuting between home and a regular workplace is generally not deductible. Personal trips never count.
That makes a mileage log important. You need records that support your business use, including your business miles, total miles, dates, destinations, and business purpose. Keep records during the year rather than reconstructing trips at filing time.
Method 1: The Standard Mileage Rate
With this method, you multiply your business miles by an IRS rate that is updated each year. The business rate is based on an annual study of the fixed and variable costs of operating a vehicle. If you use this method, you do not separately deduct actual costs such as gas, maintenance, insurance, registration fees, or depreciation.
- For miles driven in 2025, the business standard mileage rate is 70 cents per mile.
- For miles driven in 2026, the rate is 72.5 cents per mile.
Example: 8,000 business miles in 2026 × $0.725 = a $5,800 deduction.
Business-related parking fees and tolls can generally be deducted separately under either method.
Pros: simpler recordkeeping because you do not need to track each operating-cost receipt. Cons: may produce a smaller deduction if your vehicle is expensive to operate.
Important: If you want the option to use the standard mileage rate for a car you own, you generally must choose it in the first year the vehicle is available for business use. In later years, you can usually switch methods, but depreciation rules apply. For a leased vehicle, choosing the standard mileage rate generally means using it for the entire lease period, including renewals. Other restrictions also apply, so review IRS Publication 463 for your situation.
Method 2: The Actual-Expense Method
With this method, you add up the actual costs of operating your vehicle and deduct the business-use percentage of that total. Eligible costs can include:
- Gas and oil
- Insurance
- Repairs and maintenance
- Tires
- License and registration fees
- Depreciation (or lease payments)
Business-use percentage = business miles ÷ total miles. If you drove 20,000 total miles and 8,000 were for business, your business-use percentage is 40%.
Example: $12,000 in total annual vehicle costs × 40% business use = a $4,800 deduction.
Pros: can produce a larger deduction for expensive vehicles or high operating costs. Cons: more recordkeeping — you must keep receipts and may need to calculate depreciation or lease-payment limits.
Which One Should You Choose?
There is no universal answer. As a general guide:
- Standard mileage often wins for fuel-efficient, lower-cost vehicles driven a lot of business miles, and for people who value simplicity.
- Actual expenses often wins for expensive vehicles, heavy repair costs, or low total mileage where the business percentage is high.
If you are eligible for both methods, calculate both. That is much easier when your vehicle costs and mileage are tracked all year. Once you use the actual-expense method with certain depreciation choices, your ability to switch later can be limited, so consider the long-term impact, not just this year’s deduction.
Where It Goes on Schedule C
Your vehicle deduction generally goes on Line 9 (Car and truck expenses). You provide supporting details — such as business, commuting, and other personal miles — in Part IV of Schedule C unless you are required to file Form 4562 for the vehicle. For a full walkthrough of the form, see How to Fill Out Schedule C.
Keep Mileage and Costs Organized All Year
Track your mileage and vehicle costs as you go rather than reconstructing a year of driving from memory at filing time. Organized records let you compare methods and support the deduction you claim.
Simple-C helps keep your business transactions organized by Schedule C category so your vehicle costs are in one place when it is time to compare methods and prepare your return.
For the rest of your write-offs, read Schedule C Expense Categories: The Complete List.
This article provides general information, not tax advice. Mileage rates and vehicle deduction rules change and depend on your facts. Confirm the current rate and rules with the IRS or a qualified tax professional.