Vehicle Deduction Guide

Standard mileage method

Multiply business miles by the IRS standard rate. Simple, conservative, and the only method available if you used standard mileage in the vehicle's first year of business use.

Actual expense method

• Deduct business-use % of: fuel, maintenance, insurance, registration, lease, depreciation
• Better for expensive vehicles or low-mileage / high-cost use
• Requires receipts and a mileage log to compute the business-use %

Section 179 and bonus depreciation

Heavy vehicles (>6,000 lb. GVWR) used more than 50% for business can expense a large portion of the purchase price in year one via Section 179 and bonus depreciation. Light vehicles face annual luxury auto caps that stretch the deduction over several years.

Records the IRS expects

• Contemporaneous mileage log: date, miles, business purpose, destination
• Total miles driven for the year (odometer Jan 1 and Dec 31)
• Receipts for actual-expense items if using that method
• Lease or purchase paperwork and GVWR documentation

Common mistakes

• Reconstructing the mileage log at tax time
• Switching from actual to standard mileage when not allowed
• Counting commute miles as business
• Forgetting business-use % drops below 50% trigger Section 179 recapture