DEPRECIATION, VEHICLE

Standard Mileage Rate Deductions

If you use a vehicle for business you may be eligible to deduct your auto expenses based on how many business miles you drove. In 2018 you can deduct $0.545 for each business mile you drove ($0.535 per mile in 2017). The standard mileage deduction is available for self-employed individuals and drivers who use their car for hire (taxi or Uber). It is also available for individuals using their vehicle for a job-related move, charity, or medical purposes, although these activities are deductible at different rates. If you want to take advantage of this deduction you'll need to track your miles. You should also know that there are a few circumstances that can prohibit you from deducting your miles, however you may still be able to deduct your vehicle expenses based on actual expenses. Refer to our diagrams to find out if the standard mileage deduction is right for you.

UBER DRIVER / RIDESHARE

Did you know that your Uber statements only show a fraction of your deductible miles? Josh, a driver for Uber deducts his miles from the moment he leaves his driveway in search of his first passenger, until he drops off his last passenger and returns home. His total business miles are deductible, including the many more miles he drives in search of his next passenger. That's why it's important to count every mile so you can save (or earn) more money. Now obviously if you squeezed in a personal errand or two, those miles don't count, but you get the picture.

REAL ESTATE AGENT

Gina Gogetter, a Washington, D.C. - based real estate agent for Modern Realty, drove 4,000 miles last year for her business, which cost her $0.545 per mile. Gina could knock $2,180 off of her taxable income by taking the mileage deduction. Depending on her effective tax rate, Gina could save a pretty significant sum of money!

LANDLORD

Lisa is a landlord who rents a house to three college students on an annual basis. Periodically, Lisa drives to check in on her property, buy supplies for her rental unit, and meet with her tenants and contractors. When Lisa prepares her Schedule E, these miles will be deductible on line 6.

COURIER

Mike is a full time Postmates driver who purchased a new car this year to make his delivery driving more comfortable. Mikes accountant suggested he take a Section 179 deduction on his vehicle, which allowed him to deduct a significant portion of the vehicles cost in the first year he purchased it. As a result, even though Mike diligently kept a mileage log, he will not be able to deduct his postmates miles using the standard rate. Instead he must use the actual method to deduct his business driving expenses.

AUTHOR / SPEAKER

Heidi is a world renowned professor based out of Los Angeles, California. Outside of her university job, Heidi occasionally will give presentations on her subject matter. Her next speaking engagement will take her to San Francisco, which is about 400 miles away. Assuming the primary purpose of Heidi’s trip is to give her speech, and she doesn’t make her paid presentation into a long “personal” weekend, Heidi can deduct the full 800 miles she drives to get to the bay area and back.

WHAT TO KNOW ABOUT THE STANDARD MILEAGE DEDUCTION

  • Track your business miles. Keep a calendar that shows your daily business activities, which will help you substantiate where you were on certain days of the year (i.e. if you were travelling for work). There are a number of helpful apps out there, try Hurdlr or MileIQ to help you track the actual distance you drove.
  • Know what trips count. If you are using the mileage deduction, you can count trips from your home or your office to a temporary work-site or business meeting. However, the miles you drive getting from your home to your office are off the table. See our diagram to help you determine if your trips count.
  • Know your limits. Outside of disallowed trips, there are a few other circumstances that can prohibit you from deducting your miles: depreciating your vehicle, taking a Section 179 deduction on your car, and applying the mileage deduction to more than five vehicles operating at the same time are all prohibited it you want to use the standard mileage rate. See our diagram to help you determine if you may be eligible to deduct your miles.
  • Generally, if you are taking the standard mileage deduction you are not eligible to deduct any actual expenses (depreciation, insurance, gas, maintenance and repairs, etc.) since all of these costs are already baked into the Federal rate. However, you may be able to deduct your parking fees, AAA membership and tolls (to the extent these costs relate to your business activities) in addition to your business miles.
  • You may also be able to deduct the miles you drive to volunteer for a charitable organization or relocate for business purposes. Check our charitable contribution and moving expense pages to see if you can deduct these miles.