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Can I deduct vehicle expenses for business?

TL;DR

Yes, you can deduct vehicle expenses for business purposes if you use your vehicle in your trade or business.

Detailed Answer

If you use your vehicle in your trade or business, you can deduct the part of your vehicle expenses that relates to that use. You can either use the standard mileage rate or the actual expense method to calculate your deduction. The standard mileage rate is a set amount per mile that you can deduct. For 2021, the standard mileage rate is 56 cents per mile. The actual expense method allows you to deduct the actual costs of operating the vehicle for business use, including gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation. Personal use of the vehicle is not deductible. If you use the car for both business and personal purposes, you must divide your expenses based on actual mileage.

Where to Put It on the Tax Form

Schedule C, Line 9 for the standard mileage rate or Line 9 and Part IV for actual expenses

Real World Example

A freelance photographer drives 10,000 miles in a year for business purposes. If using the standard mileage rate of 58 cents per mile (for 2019), the photographer could deduct $5,800 (10,000 miles x $0.58) for vehicle expenses.

Calculation Required

A calculation is required for this deduction.

For the standard mileage rate, multiply the number of business miles driven by the current IRS mileage rate. For the actual expense method, track all vehicle operating expenses for the year and multiply by the percentage of total miles that were business miles.

Audit Risk & Documentation Tips

Maintain a detailed log of business miles driven, including dates, purposes, and destinations of trips. Keep receipts for all vehicle operating expenses. The IRS may disallow a deduction for vehicle expenses if you cannot provide this documentation.

IRS Reference

IRS Publication 463, Travel, Gift, and Car Expenses

Relevant Industries

FreelancersSmall BusinessReal EstateSales ProfessionalsConsultants

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 3, 2025

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