What are the mileage tax deduction rules?
The mileage tax deduction rules generally allow you to claim $0.655 per mile in 2023 if you are self-employed. You may also be able to claim a tax deduction for mileage in a few other specific circumstances, including if you’re an armed forces reservist, qualified performance artist or traveling for charity work or medical reasons.
There’s a lot to unpack when talking about claiming mileage on your taxes. In this article, we’ll outline who can take a tax deduction for mileage, how to take the deduction, and other things you should consider.
If you use you your vehicle for business purposes, you should know that claiming mileage is one of two ways of claiming a tax benefit for car-related costs. The “actual car expense” method is the other way; it lets you claim a deduction for car insurance, deductible car repairs, among other costs.
Do you need help with mileage deductions on your taxes and other deduction possibilities? Check out our Guide to Gig Worker Taxes.
Who can take a tax deduction for mileage?
Before the Tax Cut and Jobs Act (TCJA) of 2017, employees were able to claim a tax deduction for mileage and other expenses that were not reimbursed by their employer. However, the TCJA suspended the deduction for employee business expenses, changing the mileage deduction rules so that most employees can no longer deduct mileage and other unreimbursed expenses.
Here’s who may still claim mileage on taxes:
- Small business owners. Self-employed taxpayers who file Schedule C or Schedule F.
- Other self-employed workers. This includes independent contractors, such as drivers for rideshare services.
- Certain types of employees. Specifically, qualified performing artists, reservists in the armed forces, and fee-based government officials are eligible to claim mileage
- Individuals traveling for volunteer work or for medical appointments.
Claiming mileage on your taxes
How you deduct mileage for your taxes depends on your situation. So, if you’re claiming mileage as a medical or charitable expense, you won’t do it the same way as a business expense. The forms you use and the amounts you can deduct per mile will vary.
How to deduct mileage for taxes for the self employed
Self-employed individuals will report their mileage on the Schedule C form. In addition to providing the number of miles driven during the tax year, you’ll also need to answer a few questions about the vehicle, including when it was placed into service for business.
As mentioned above, the mileage rate for business owners and other self-employed workers is $0.655 in 2023.
If you’re not sure what to include as your business mileage, you’re not alone. We often get this question: “Can I deduct mileage to and from work?” The answer here is no; you’d just count the trips after arriving at work or first business destination.
For business owners, the trip from home to your main business location, such as an office or store, is not deductible. Trips driven from there to other business locations, such as to call on clients, and from your last stop back to your main place of business are deductible.
For rideshare drivers, such as Uber or Lyft, this means the drive from home to pick up the first passenger and the drive home after the last drop off are not deductible. Only the trips driven between the first business stop and the subsequent stops can be used for claiming mileage on your taxes.
Note: if your home office is your main business location, then trips from home to other business locations are deductible.
How to calcuate mileage for certain employees
If you’re one of the types of employees listed above, you’ll also be able to claim mileage on your individual tax return at the rate of $0.655 in 2023. You’ll report your miles and also answer a few questions about the vehicle on Form 2106.
Employees must follow the same rules that business owners and other self-employed workers follow. That is, commuting expenses – trips from home to your first destination – are not deductible. See IRS Publication 463 for more information.
How to deduct mileage for taxes in other situations
You can claim mileage for trips related to medical appointments or for volunteering or charity work if only if you’re claiming itemized deductions. You should investigate whether claiming the standard deduction (vs. itemized deductions) provides you a better tax benefit.
- Mileage for medical care is included in your medical deduction. The rate is $0.16
- Mileage for volunteer work is included in your charitable deduction. The rate is $0.14for 2023.
Limitations to know about when claiming mileage on your taxes
There are a few times when you won’t be permitted to claim the standard mileage rate option. This option is not allowed if you:
- Use five or more cars at the same time (as in fleet operations)
- Claimed a depreciation deduction for the car using any method other than straight line depreciation
- Claimed a Section 179 deduction on the car
- Claimed the special depreciation allowance on the car
- Claimed actual car expenses after 1997 for a leased car, or
- Are a rural mail carrier who receives a qualified reimbursement
What else should you consider when claiming a tax deduction for mileage?
Choosing the standard mileage rate vs. the actual car expense method has its own set of implications.
- If you want to use the standard mileage rate for a personally owned car, you must use that method the first year the car is used for business. You must make the choice by the return due date (including extensions) of the year the car is placed in service. If you choose to switch methods in later years, specific rules for depreciation will apply.
- If you chose the actual car expense method the first year the car is used for business, you must stick with that choice every year the car is used for your business.
Lastly, recordkeeping is a must for anyone who wants to claim a tax deduction for mileage. You’ll need comprehensive and contemporaneous records in the event the IRS wants to see them. Contemporaneous means you’re tracking your miles when you take business trips rather than trying to reconstruct them months or years later.
You could use pen and paper to keep track – or even log your miles from your computer – but there are also smartphone apps that can make tracking mileage a lot more convenient.
In addition to keeping records on your miles, you should also keep receipts for parking and toll fees. Even if you use the standard mileage rate, parking and tolls (other than parking and tolls related to your main place of business) may be deductible.
Have more questions about mileage deduction rules?
We understand you might want some help when it comes to claiming mileage on your taxes. That’s why we’re here.
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