If you drive for work you get to deduct the vehicle. There are two ways to do it, they produce very different numbers, and the choice is less reversible than most people realize.
Most guides tell you to “run both and pick the bigger one.” That is right as far as it goes, but it skips the part that actually traps people: what you choose in the vehicle’s first business year constrains what you can do in every year after.
The two methods
Standard mileage multiplies your business miles by a published rate. In 2026 that is 72.5 cents through June 30 and 76 cents after. The rate is designed to cover fuel, maintenance, insurance, registration, and depreciation, all in one number. You keep a mileage log and nothing else.
Actual expenses deducts the business-use share of what the vehicle really costs you. Add up fuel, insurance, repairs, tires, registration, lease payments or depreciation, then multiply by the percentage of miles that were business. You keep every receipt and the mileage log, because the log is what produces the percentage.
Note that second point. Actual expenses does not free you from mileage tracking. It adds paperwork on top of it.
The rule that catches people
In the first year you use a vehicle for business, you effectively choose a path:
- Start with standard mileage and you generally keep the option to switch to actual expenses in a later year.
- Start with actual expenses and claim accelerated depreciation on the vehicle, and you generally cannot switch to standard mileage for that vehicle later.
Leased vehicles are stricter still: whichever method you pick in the first year is typically the method for the entire lease.
This is the part worth a conversation with your preparer before you file the first return with a new vehicle on it. The choice is cheap to make correctly and expensive to unwind. Depreciation rules in particular have limits and recapture consequences that go well past the scope of a blog post.
Running the numbers
Take a contractor with a used work truck, 20,000 business miles out of 25,000 total — so 80% business use.
Standard mileage: 10,000 miles at 72.5¢ plus 10,000 at 76¢ gives $14,850. That is the whole calculation.
Actual expenses, for the same truck:
| Cost | Year total | 80% business |
|---|---|---|
| Fuel | $6,800 | $5,440 |
| Insurance | $2,400 | $1,920 |
| Repairs and maintenance | $3,100 | $2,480 |
| Tires | $1,200 | $960 |
| Registration | $400 | $320 |
| Depreciation | $5,500 | $4,400 |
| Total | $19,400 | $15,520 |
Actual expenses wins by $670 here. Whether that is worth it depends on how much you value not keeping a year of vehicle receipts — and on whether you want to give up the ability to switch methods later.
Which one usually wins
Standard mileage tends to win when the vehicle is cheap to run relative to how far it goes: an older paid-off car, high annual mileage, modest repair costs. A rideshare driver putting 30,000 miles on a Corolla is the classic case, and it is not close.
Actual expenses tends to win when the vehicle is expensive relative to its mileage: a new or heavy truck, high insurance, a big repair year, or a lot of local miles on a costly vehicle. A plumber with a $60,000 van doing 12,000 local miles will usually do better on actual.
The rough test: high miles, cheap vehicle → standard. Low miles, expensive vehicle → actual. When it is close, standard mileage is worth real money in time saved, and it preserves your flexibility.
Two mistakes that cost more than the method choice
Commuting is not business mileage. Home to your regular workplace is personal, under either method. Job site to job site is business. Home to a temporary work location outside your normal area can qualify. If you have a qualifying home office, the calculus changes again — another reason to ask before assuming.
No log, no deduction. Both methods need contemporaneous mileage records, and “contemporaneous” means written down around when you drove, not reconstructed in April from memory. This is the single most common way a vehicle deduction gets reduced or thrown out, and it is entirely avoidable.
What to do
If the vehicle is already in service, you are on the path you chose. Keep the log either way, and confirm with your preparer whether switching is open to you.
If you are about to put a vehicle into service, run both methods on realistic numbers before the first return, and understand what each choice forecloses. An hour with your preparer now is worth more than any single year’s difference between the two methods.
And either way, log the miles. Both roads run through the same record, and the record is the thing people skip.
Stop filing receipts by hand.
Text a photo, forward an email. We read it, categorize it, and have it ready at tax time.
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