Business Mileage Deduction FAQs for Small Businesses

If you run a small business, your car is basically an employee who never clocks out. It hauls inventory,
chases clients, picks up supplies, and occasionally serves as a mobile office where you negotiate contracts
in a parking lot like a corporate spy (but with coffee stains).

The good news: the IRS lets many small businesses deduct eligible business miles. The less-fun news:
the IRS also loves documentation. So this guide answers the questions small business owners actually ask,
with clear examples, practical tips, and just enough humor to keep mileage logs from ruining your day.

Quick cheat sheet: the mileage deduction in plain English

• You can usually choose between the standard mileage rate and the actual expense method.
• For 2026: the business standard mileage rate is 72.5 cents per mile.
• What counts: business trips (clients, job sites, business errands), not commuting.
• What wins audits: a simple, consistent mileage log with dates, miles, destinations, and business purpose.

FAQ 1: What is the business mileage deduction, exactly?

The business mileage deduction is a way to reduce taxable income based on the cost of using a vehicle for
business. Instead of guessing what your car “cost” for work, you can either:

• Use the standard mileage rate (miles × IRS rate), or
• Use actual expenses (gas, repairs, insurance, depreciation/lease costs, etc.) multiplied by your business-use percentage.

The goal is the same: deduct the business portion of your vehicle costswithout deducting personal driving.
(Yes, even if your “personal driving” was to get donuts for the team. Delicious doesn’t automatically mean deductible.)

FAQ 2: What’s the IRS standard mileage rate for 2026, and does it change?

For 2026, the standard mileage rate for business use is 72.5 cents per mile.
The IRS typically updates rates annually, and rates can occasionally change mid-year (it’s rare, but it’s happened),
so you should confirm the rate for the year you’re filing.

Do EVs and hybrids use a different rate?

Generally, no. The standard mileage rate applies across vehicle types (gas, diesel, hybrid, and fully electric).
The rate is meant to approximate average operating costs, not just fuel.

FAQ 3: Who can claim the mileage deduction?

Mileage deductions are most common for:

• Sole proprietors filing Schedule C
• Single-member LLCs (typically Schedule C)
• Partners (depending on how expenses are handled and reimbursed)
• Independent contractors/gig workers (rideshare, delivery, freelance services)

What if I’m an employee (W-2) who drives for work?

This is the part that trips people up. Many W-2 employees can’t deduct unreimbursed employee business expenses
under current rules, with limited exceptions for certain categories (like some performing artists or reservists).
Practically speaking: if you’re a W-2 employee, you’ll usually want reimbursement from your employer under an
accountable plan (more on that below).

What if I own an S-corp or C-corp and drive my personal car for business?

In many cases, the cleaner approach is for the corporation to reimburse you (or employees) using an accountable plan.
That keeps the paperwork tidy and avoids “who deducts what?” headaches. The business deducts the reimbursement,
and the reimbursement generally isn’t taxable to the employee when done correctly.

FAQ 4: What miles count as “business miles”?

Think: “Would I have driven this trip if I didn’t have the business?” If the answer is yes, it’s a candidate for business mileage.
Common deductible business trips include:

• Driving from your office to a client meeting
• Driving between job sites
• Driving to pick up supplies, inventory, or equipment
• Driving to the bank, post office, shipping center, or printer for business tasks
• Driving to professional events, trainings, or networking meetings (with a business purpose)

A concrete example

Sam owns a small landscaping business. On Tuesday, Sam drives:

• 8 miles from home to the first job site
• 12 miles between two client properties
• 5 miles to the hardware store for mulch and tools
• 9 miles back home

The deductible mileage may include the between-jobs miles and the business errand miles.
Whether the home-to-first-site miles are commuting or business depends on the facts (like whether Sam has a qualifying home office
or an established business location). The details matterand that’s why the log matters.

FAQ 5: What miles do NOT count (aka “commuting is the villain”)?

Commuting is generally nondeductible. Commuting typically means driving between your home and your main (regular) work location.
Common nondeductible miles:

• Home → your regular office
• Home → a regular job site you report to routinely
• Regular work location → home

A quick rule of thumb: if the drive is basically “going to work,” it’s probably commuting.
If the drive is “doing work,” it’s more likely business mileage.

FAQ 6: Can I deduct miles from my home office to a client or job site?

Often, yesif your home office qualifies as your principal place of business under IRS rules.
When your home office legitimately counts as your main business location, trips from that home office to clients,
job sites, or business errands are generally business travel rather than commuting.

Translation: your home office can be a mileage-deduction superpower. But only if it’s real, regular, and properly documented.
“My laptop touched the kitchen table once” is not the same as a qualifying home office.

FAQ 7: What about driving to a “temporary work location”?

Temporary assignments can create deductible travel in situations where permanent work locations would not.
The rules get nuanced quickly, especially if you expect the assignment to last more than a year.
If your work takes you to new locations for limited durations, keep strong notes in your log about
where you went and why.

FAQ 8: Standard mileage vs. actual expenses: which method is better?

The most honest answer is: whichever one gives you the larger deduction and is easiest to support.
Here’s how to think about it:

Standard mileage method (simple and popular)

• Best for: high-mileage businesses, reliable cars, people who want easy math
• How it works: business miles × IRS rate
• Still deductible on top: certain business-related parking fees and tolls (not “parking at your regular workplace”)
• What you’re not doing: separately deducting gas, repairs, insurance, depreciation, etc. (they’re baked into the rate)

Actual expense method (more paperwork, sometimes bigger)

• Best for: expensive vehicles, heavy repairs/insurance costs, lower mileage, or vehicles used mostly for business
• How it works: total eligible vehicle costs × business-use percentage
• Costs that may count: gas, oil, maintenance, repairs, tires, insurance, registration fees, lease payments,
  and depreciation (if you own the vehicle), plus other relevant costs

A quick comparison example

Taylor drives 10,000 business miles in 2026.
Using the standard mileage method: 10,000 × $0.725 = $7,250 deduction (plus eligible tolls/parking).

Using actual expenses: suppose Taylor’s total annual vehicle costs are $11,000 and the vehicle is used 60% for business.
The deduction would be 60% × $11,000 = $6,600.
In this example, standard mileage wins.

But flip the factshigher costs, higher business-use percentageand actual expenses can win.
Many owners track both during the year and decide at tax time (as long as they follow the method-switching rules).

FAQ 9: When am I NOT allowed to use the standard mileage rate?

The standard mileage rate comes with restrictions. For example, you generally can’t use it if:

• You operate five or more cars at the same time (fleet operations)
• You claimed certain depreciation benefits on that vehicle (like Section 179 or special depreciation allowances, depending on facts)
• You already used actual expenses in a way that blocks switching for that vehicle

Bottom line: if you’ve done anything “fancy” with depreciation, check the rules before assuming you can do standard mileage.
Fancy is fun until it’s disallowed.

FAQ 10: Can I switch between standard mileage and actual expenses?

Sometimesbut not always, and not casually. A common framework:

• If you use standard mileage in the first year the car is available for business, you may be able to switch to actual expenses later.
• If you use actual expenses in the first year (and claim depreciation in ways that lock you in), you may not be able to switch to standard mileage for that vehicle.
• If the vehicle is leased, choosing standard mileage can require consistency for the lease term.

When in doubt, assume switching is possible only with rules and conditionsthen verify with a tax pro or official guidance.

FAQ 11: What records do I need for a mileage deduction?

Your mileage deduction is only as strong as your records. A good log includes:

• Date of the trip
• Start and destination
• Business purpose (client name, job site, supply run, etc.)
• Miles driven
• Odometer readings at least at the beginning and end of the year (best practice)

Do I need receipts for gas if I use standard mileage?

Not for the mileage itselfbecause the rate already assumes typical operating costs.
But you should keep documentation for anything you’re deducting separately (like tolls or business parking fees).

Paper notebook vs. app: what’s acceptable?

Both can work. The IRS cares more about accuracy and consistency than whether your log is handwritten or app-based.
Apps are convenient because they timestamp trips and reduce the “reconstructing a year of driving in one panicked weekend”
problem. If you prefer paper, just be consistent and don’t “backfill” months at a time from memory.

FAQ 12: How long should I keep mileage logs and supporting documents?

A common baseline is at least three years after you file the return, but record retention can be longer in certain situations.
Since mileage supports a deduction, keep your logs and receipts as long as they’re needed to prove what you claimed.
If you’re the “sleep better at night” type, keep them longerespecially if your business has more complex returns.

FAQ 13: Can I deduct business parking and tolls too?

Often, yes. Business-related tolls and parking fees can typically be deducted in addition to the standard mileage rate.
The usual “gotcha” is parking at your regular workplace, which is generally treated like commutingso it’s typically not deductible.

FAQ 14: How do I claim the mileage deduction on my tax return?

Where you claim it depends on how your business is taxed:

• Schedule C (common for sole proprietors and many single-member LLCs)
• Business returns for partnerships and corporations, often through reimbursement policies and expense reporting

If you use actual expenses, depreciation may be involved. If you use standard mileage, you still need to track business miles
and maintain the right kind of records. Your bookkeeping system should be able to produce a mileage summary for the year.

FAQ 15: What is an “accountable plan,” and why should small businesses care?

An accountable plan is a reimbursement arrangement where employees (including owner-employees in some setups)
substantiate business expenses and return excess reimbursements within a reasonable period.
When done correctly, reimbursements generally aren’t treated as taxable wages, and the business gets the deduction.

Why this matters (especially in 2026)

Since many employees can’t deduct unreimbursed work expenses on their personal returns under current rules,
reimbursing through an accountable plan can be the difference between “deductible” and “just… expensive.”

A simple accountable plan workflow

1. Employee logs business miles (date, destination, purpose, miles).
2. Employee submits a mileage report (monthly is common).
3. Business reimburses at the IRS rate (or another reasonable rate, depending on policy).
4. Any excess reimbursement is returned on time.

FAQ 16: What are the most common mileage deduction mistakes?

• Mixing commuting with business miles (the fastest way to overstate the deduction)
• No business purpose noted (“Drove 18 miles” is not a business explanation)
• Reconstructing logs at year-end with “best guesses”
• Choosing a method without understanding limitations (especially if depreciation/Section 179 is involved)
• Forgetting “extra” deductible items (like eligible tolls and business parking fees)

Conclusion: Make the deduction boring (so the IRS doesn’t make it exciting)

The mileage deduction can be a meaningful tax break for small businessesespecially if you drive often.
The best strategy isn’t complicated: track your miles consistently, separate commuting from business travel,
and choose the method that fits your real driving and real costs.

If your setup involves multiple vehicles, a corporation, reimbursements, or depreciation decisions, get tailored advice.
A 20-minute conversation with a tax pro can save you from a 20-hour cleanup later.

Real-World Experiences: What Small Businesses Learn the Hard Way (So You Don’t Have To)

Below are common “this totally happens” experiences that small business owners run into when dealing with mileage deductions.
Consider them friendly cautionary taleslike business folklore, but with odometer readings.

1) The “I’ll remember it later” log (spoiler: you won’t)

A freelance designer does client meetings around town. They plan to log mileage “when things slow down.”
Suddenly it’s April, and “when things slow down” is now a mythical season, like “tax time with no surprises.”
They try to rebuild trips from calendar appointments and vague memories. The result is a log that looks
believable to a human friend but flimsy to an auditor. The fix is simple: log trips daily or weekly.
Even a quick note like “Client A kickoff meeting” beats “umm… business stuff.”

2) The commuting confusion that costs real money

A home services business owner drives from home to the first job site every morning and assumes it’s all deductible.
But the first drive may be commuting unless the home office is legitimately the principal place of business
(or the facts support another exception). Once they separate commuting from true business miles
(between job sites, to suppliers, to the bank, etc.), the deduction becomes cleanerand more defensible.
The lesson: the mileage deduction isn’t “all driving while self-employed.” It’s “business driving with a purpose.”

3) The “standard mileage is easy” winuntil the car gets expensive

A small real estate team uses standard mileage for years because it’s simple. Then one year they buy a newer vehicle,
insurance jumps, repairs hit, and the business-use percentage is high. That’s when actual expenses might win.
Many owners discover the smart move is to track both miles and actual costs during the year, then decide at tax time.
It’s like shopping with a budget: you can’t know the best option if you refuse to look at prices.

4) The S-corp owner who “deducts it personally” and regrets it later

Some S-corp owners try to take mileage deductions on their personal return for driving done on behalf of the corporation.
That often turns into messy bookkeeping and potential compliance issues. A more practical pattern is to submit mileage reports
to the corporation and get reimbursed under an accountable plan. The corporation takes the deduction, the reimbursement is typically
not taxable when handled properly, and everyone sleeps better. The lesson: the right structure isn’t just about paying less tax
it’s about having fewer “explain this” moments.

5) The “fleet-ish” business that outgrows its mileage habits

A growing delivery business starts with one car and a simple spreadsheet. Then it becomes three vehicles, then five,
then a rotating cast of drivers and “whose keys are these?” chaos. Suddenly the mileage method restrictions (and recordkeeping expectations)
matter a lot more. The business shifts to a system: driver policies, standard trip categories, routine reporting,
and a monthly review so mistakes don’t pile up for a year. The takeaway: your mileage process should scale with your business.
If you’re growing, build a routine nowfuture you will be grateful.

6) The “it’s only a few trips” mindset that quietly adds up

A small online seller thinks mileage doesn’t matter because they “only” run errands a few times a week: post office drops,
packaging supply runs, occasional inventory pickups. But those miles add up fast over 12 months. When they finally track it,
they realize mileage is one of their most consistent deductions. The lesson: mileage isn’t flashy, but it’s steady.
And steady deductions are the ones that quietly improve your bottom line.