Business Mileage Deduction for the Self-Employed: 2026 Rates, Actual Expenses and Records
Driving for a business is deductible; driving to it is not. That distinction, and the records needed to prove which is which, decide most of what a self-employed person can claim for a car. The amount is then computed one of two ways — a per-mile rate the IRS publishes, or the actual costs of the car apportioned to business use — and the choice made in the first year a car is used for the business constrains the choices available later. 2026 adds a wrinkle: the IRS raised the standard rate in the middle of the year, so a single year's miles are valued at two rates.
The 2026 standard mileage rates
| Miles driven | Business rate |
|---|---|
| January 1 – June 30, 2026 | 72.5 cents per mile |
| July 1 – December 31, 2026 | 76 cents per mile |
The rate is meant to cover the whole cost of operating the car — fuel, maintenance, tires, insurance, registration and depreciation — per business mile. Parking fees and tolls for business trips are deductible on top of it; interest on a car loan is deductible in proportion to business use for a self-employed person, on top of the rate as well. A mid-year change means keeping the log by date, so that miles before and after July 1 can be totalled separately; the IRS does not permit a blended rate.
What counts as business driving
Business miles are miles driven for the trade or business: to a client's premises, between two work locations, to the bank, the post office, a supplier or a trade show, to pick up materials. The trip is deductible because its purpose is business (§162(a)), and it is deductible in full even if a personal errand is folded into it, provided the business purpose was the reason for the trip.
Commuting is not business driving. The trip from home to a regular place of work and back is a personal expense (§262), however far it is and whatever the car carries. For a self-employed person the question is where the "regular place of work" is. If the home is the principal place of business — the same test as for the home office deduction, including the administrative-activities rule — then the home is the office, and every trip from it to a client, a job site or another work location is business travel (Rev. Rul. 99-7). A freelancer without a qualifying home office who drives to a coworking space each morning is commuting; the same person with a qualifying home office who drives from it to a client is not.
Trips to a temporary work location — one expected to last, and lasting, a year or less — are deductible from home even without a home office, if the taxpayer has one or more regular work locations elsewhere; the same revenue ruling sets out the cases. Mixed trips are apportioned: a drive to a client followed by a detour to the grocery store is business as far as the client and personal after.
Standard rate or actual expenses
The standard rate replaces the actual costs of the car. The actual-expense method instead totals fuel, oil, repairs, tires, insurance, registration, lease payments or depreciation, and multiplies by the business percentage — business miles divided by all miles. Under either method, parking, tolls and the business share of loan interest are added separately. The choice is subject to two rules from Publication 463:
- An owned car: the standard rate must be chosen in the first year the car is used for business. After that the taxpayer may switch to actual expenses in a later year (using straight-line depreciation), but a car started on actual expenses with accelerated depreciation can never move to the standard rate.
- A leased car: whichever method is chosen in the first year must be kept for the entire lease, including renewals.
The standard rate also cannot be used for more than four cars at once, or by a business that has used accelerated depreciation or a §179 deduction on the car. Because the choice in year one closes doors, it is worth estimating both figures before filing the first return on which the car appears.
As a rough comparison, take a car driven 16,000 miles in the year, 8,000 of them for business (50.0%). Actual costs: fuel $2,200, insurance $1,600, maintenance and tires $900, registration $300, depreciation $4,800 — $9,800 in all, of which 50.0% is $4,900. The standard rate on the same miles, driven evenly through the year, gives 4,000 × 72.5 cents = $2,900 plus 4,000 × 76 cents = $3,040, $5,940 in all. The standard rate wins for an inexpensive, economical car with high business mileage; actual expenses win for an expensive car, a car in its first years of depreciation, or one with heavy repair costs. The gap is often small enough that the recordkeeping decides it.
What 8,000 miles saves
Car expenses are deducted on Schedule C (Part II, line 9), so they reduce net profit and with it both income tax and self-employment tax. A single filer with $80,000 of receipts and $8,000 of other expenses adds the $5,940 standard-rate deduction:
| Net profit | Self-employment tax | Income tax | Total federal tax | |
|---|---|---|---|---|
| Without the mileage deduction | $72,000 | $10,173 | $4,630 | $14,803 |
| With $5,940 of mileage | $66,060 | $9,334 | $4,100 | $13,434 |
| Saved | $839 | $530 | $1,369 (23.1% of the deduction) |
The saving is 23.1% of the deduction — well above the filer's 12.0% income tax bracket, because self-employment tax falls too. In a state with an income tax the state saving comes on top. Each business mile is worth roughly 17 cents in federal tax to this filer; a log that captures two more trips a week pays for the minute it takes.
Records the IRS requires
A car is "listed property", and §274(d) disallows any deduction for it that is not substantiated by adequate records or sufficient evidence corroborating the taxpayer's own statement. Estimates are not accepted; a deduction reconstructed after the fact from a calendar is at the examiner's discretion. For each business trip the record has to show:
- the date;
- the destination and the miles driven (odometer readings, or a route with a known distance);
- the business purpose — the client, the errand, the event.
The log also needs the odometer reading at the start and end of the year, or the total miles driven, because the business percentage matters under the actual-expense method and the IRS asks for total miles on Schedule C Part IV under both. A paper log kept in the car, a spreadsheet updated the same day, or a phone app that records trips by GPS all satisfy the requirement; what does not is a single annual figure with nothing behind it. Under the actual-expense method, receipts for every expense are needed as well. Records should be kept for at least three years after the return is filed, and for the life of the car plus three years where depreciation is involved.
Reporting
Schedule C, line 9, takes the car and truck expense. Part IV of Schedule C (or Form 4562 if depreciation or more than one vehicle is involved) asks when the car was placed in service, the year's business, commuting and other miles, whether the car was available for personal use, whether another vehicle was available, and whether written evidence exists — the last two questions being the §274(d) test in checkbox form. Answering "no" to the written-evidence question invites disallowance of the whole deduction.
Documents this guide was written from
- IRS standard mileage rates — 2026 business rates: 72.5 cents per mile for January–June (IR-2025-128) and 76 cents for July–December (IR-2026-29)
- 26 U.S.C. §274(d) — substantiation required for listed property: amount, time, place and business purpose
- 26 U.S.C. §162(a) and §262 — ordinary and necessary business expenses; personal, living and family expenses not deductible
- IRS Publication 463, Travel, Gift, and Car Expenses — the standard mileage rate's conditions, the actual-expense method, commuting, and recordkeeping
- Rev. Rul. 99-7 — trips between a home that is the principal place of business and other work locations are business travel, not commuting
Figures in the tables are computed by the same engine as the site's calculators from its 2026 data files; the methodology page lists the rules and their verification status, and the editorial policy says how sources are chosen. Tallyvane is not a CPA, enrolled agent or attorney.