Vehicle expenses are one of the most commonly missed deductions for self-employed individuals and small business owners — and one of the most commonly mishandled. The IRS standard mileage rate is the simplest way to deduct business driving, but it requires proper recordkeeping and an understanding of when it applies.

This article covers the 2025 standard mileage rate, how to use it, when actual expenses might be better, what records you need, and how the deduction works differently depending on your business structure.

The 2025 Standard Mileage Rates

The IRS sets standard mileage rates annually, typically announced in December for the following year. For 2025:

• Business use: 70 cents per mile
• Medical or moving (active-duty military only): 21 cents per mile
• Charitable service: 14 cents per mile (set by statute, does not change with inflation)

The business rate is the one relevant to most self-employed individuals and business owners. It is designed to cover the average cost of operating a vehicle for business purposes — fuel, depreciation, insurance, maintenance, and registration fees.

What Counts as Business Mileage

Not all driving is deductible business mileage. The IRS distinguishes between commuting (not deductible) and business travel (deductible).

• Deductible: Driving from your office or home office to a client site, between business locations, to a bank or supplier for business purposes, or to a business meeting
• Deductible: Driving from home to a temporary work location (not your regular place of business)
• Not deductible: Commuting from home to your regular office or place of business
• Not deductible: Personal errands, even if combined with a business trip

If you have a qualifying home office, driving from home to any business location is generally deductible — because your home is your principal place of business. This is one of the practical benefits of the home office deduction.

Standard Rate vs. Actual Expenses

You have two methods for deducting vehicle costs: the standard mileage rate or actual expenses. You must choose a method in the first year you use the vehicle for business, and the choice has implications for future years.

Standard mileage rate: Multiply business miles by the rate. Simple, requires only a mileage log. Does not require tracking fuel receipts, insurance, or repair costs separately.

Actual expenses: Track all vehicle costs — fuel, oil, tires, insurance, registration, repairs, depreciation (or Section 179/bonus depreciation) — and multiply by the business-use percentage. More complex, but often produces a larger deduction for expensive vehicles or high-cost operating environments.

If you use the standard mileage rate in the first year, you can switch to actual expenses in a later year (though you must use straight-line depreciation going forward). If you use actual expenses — including Section 179 or bonus depreciation — in the first year, you generally cannot switch to the standard mileage rate for that vehicle in future years.

Recordkeeping Requirements

The IRS requires a contemporaneous mileage log — meaning records kept at or near the time of each trip. A log reconstructed from memory at year-end does not satisfy the requirement and will not hold up in an audit.

Each entry should include:

• Date of the trip
• Destination (address or description)
• Business purpose of the trip
• Number of miles driven

Mileage tracking apps (MileIQ, Everlance, TripLog, Stride) automate most of this by using GPS to detect trips and allowing you to swipe to classify each one as business or personal. The app then generates a report at year-end. This is the most practical approach for most self-employed individuals.

How the Deduction Works by Business Structure

Where the mileage deduction appears on your tax return depends on your business structure:

• Sole proprietor / single-member LLC: Deducted on Schedule C as a business expense. Reduces both income tax and self-employment tax.
• S-corporation owner: The S-corp can reimburse the owner for business mileage under an accountable plan. The reimbursement is deductible by the S-corp and not taxable to the owner. Alternatively, the owner can deduct unreimbursed employee business expenses — but this is generally less favorable and subject to limitations.
• Partnership / multi-member LLC: Vehicle expenses are typically deducted at the entity level if the vehicle is owned by the business, or reimbursed to partners under an accountable plan.

For sole proprietors, the mileage deduction reduces self-employment income — which means it reduces SE tax as well as income tax. This makes it more valuable than a deduction that only reduces income tax.