As a small business owner, handling your own business taxes probably isn’t your favorite pastime. Still, when it comes time to prepare your tax return, you’ll want to take advantage of every deduction and credit available to you to reduce your tax burden.
If you’re a business owner who uses a vehicle to travel for work purposes, then you may be eligible to deduct certain mileage and vehicle expenses from your taxable income. Two of the most common methods available to you are the standard mileage deduction and the actual expense deduction. With a better understanding of what these methods entail and some of their pros and cons, you can determine which is best for your unique tax situation.
Understanding Standard Mileage
The standard mileage method involves using what is known as a standard mileage rate to calculate common expenses related to using a personal vehicle for business purposes. This standard rate, which is adjusted and set by the Internal Revenue Service (IRS) annually, takes such expenses into account as fuel, maintenance, depreciation, registration fees and insurance into a uniform per-mile amount.
For 2025, standard mileage rates for self-employed workers and business owners total 70 cents per mile driven. This means that if you drove a total of 1,000 miles for business purposes in the previous tax year, you could claim a deduction of $700.
Understanding Actual Expenses
Another option available to you when it comes to claiming expenses related to using your personal vehicle for business is the actual expenses method. This more detailed approach involves manually calculating eligible costs related to fuel, repairs, insurance, registration fees, depreciation and other operating expenses in order to claim a deduction.
As you can probably imagine, this method is a bit more complex and time-consuming because it requires much more detailed record-keeping and careful calculation — especially considering that only business-related vehicle expenses can be deducted. Still, it can be a suitable option for vehicles with higher depreciation or fuel costs.
Mileage Tracking Made Easier
Keeping accurate records is essential, no matter which method you choose. Fortunately, there are several mobile apps designed to simplify mileage tracking—many of which can integrate with your calendar or GPS to automatically log trips. These tools not only capture mileage, but can also help correlate trips with meetings and business appointments, making it easier to justify deductions if you’re ever audited.
Remember, to support your deduction, you must document more than just the miles—you also need to record the date and the business purpose of each trip. Whether you’re using an app or keeping a manual log, consistency and detail are key.
Which Method Is Best?
While claiming mileage is the most common approach, ultimately, there’s no one-size-fits-all answer. You’ll need to carefully consider your unique situation, and the expenses related to operating your own vehicle to determine which option is right for you.
In general, if you’re looking for the quickest and simplest approach to deducting these expenses from your income, then the standard mileage deduction will be your best bet. With this method, you only need to know how many miles you drove for business in the previous tax year. From there, you can multiply that number by the standard mileage deduction amount (which is 0.70 for 2025) to get your final figure. An easy way to do this can be to snap a picture of the odometer with your cellphone to track the miles without dealing with paper, pen, or memorizing.
On the other hand, if you drive a vehicle with high depreciation costs (such as a leased vehicle), high insurance costs, or high fuel costs, it may make more sense to take the actual expenses approach. Of course, this approach will require you to keep more detailed records of all your expenses for operating and owning your vehicle. In addition to tracking the number of miles you’ve driven for business purposes, you may also need to carefully track your insurance costs, repair/maintenance expenses, fuel costs, and more.
It is also worth noting that if you select the actual expenses approach, you won’t be able to switch to the standard mileage method later on. With this in mind, you should be absolutely sure of your choice before moving forward.
Looking for Further Tax Guidance?
The standard mileage approach and the actual expenses method are viable options for deducting eligible expenses from your taxable income. While both options have inherent benefits and possible drawbacks, choosing the right approach can save you a lot of money and hassle down the road.
Still not sure which approach is best for your tax situation? An experienced tax advisor can provide the personalized guidance you need and ensure you’re not leaving money on the table. The tax consultants at DMJPS CPAs + Advisors are here to help you make the most of your tax strategy.
If you have any questions or want additional information, please contact DMJPS CPAs + Advisors.
Enrique Casalis, EA
Enrique Casalis is a Manager at DMJPS CPAs + Advisors in Tax Services. With nearly a decade of experience in public accounting, Enrique specializes in providing tailored tax planning strategies and uncovering tax savings opportunities for his clients. His approach emphasizes efficiency, exceptional quality, and superior client service.