Mileage tax deduction and business mileage reimbursement rules

Driving your vehicle a lot of work can mean a lot of extra miles and added costs. Luckily, you can claim a tax write off for mileage in specific circumstances. While not everyone qualifies, it’s worth the time to check into the rules as the mileage deduction can add up to significant tax savings. And you don’t have to be a tax expert to claim them.

In a nutshell, deductible mileage generally falls into three categories: driving for business purposes, charitable or medical trips, and certain mileage for those in the armed forces.

But there’s much more to unpack when talking about claiming mileage on your taxes. The tax experts at H&R Block are here to guide you through the nuances so you don’t have to feel stressed. We’ll share who can take a tax deduction for mileage, the rates for deducting mileage, how to take the mileage tax deduction, business mileage reimbursement details, and other common business mileage tax deduction questions.

Taking the mileage tax deduction

If you use your vehicle for business purposes, you should know that the standard mileage rate method is one of two ways of claiming a tax benefit for car-related costs. The actual expense method is the other way; it lets you claim a deduction for car insurance and deductible car repairs, among other vehicle expenses. Choosing the standard mileage rate method vs. the actual expense method has its own set of implications.

• If you want to use the standard mileage rate for a car you own, 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. The standard mileage rates are covered below. 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.

Do you need help with mileage deductions on your taxes and other deduction possibilities? Check out our Tax Preparation Guide to Gig Worker Taxes.

Who can take the mileage tax deduction?

Unfortunately, not everyone can claim the mileage tax deduction. This tax write-off applies to:

• Self-employed or small business owners, including independent contractors, such as drivers for rideshare services.
• Certain types of employees, like qualified performing artists, reservists in the armed forces, and fee-based government officials
• Individuals traveling for volunteer work or to medical appointments

IRS mileage deduction rules

Before the 2017 Tax Cuts and Jobs Act (TCJA), employees could claim a tax deduction for mileage and other expenses that weren’t reimbursed by their employer. However, the TCJA suspended the deduction for employee business expenses, so most employees can no longer deduct mileage and other unreimbursed expenses on their taxes.

How much is employer mileage reimbursement?

Even though most employees can’t claim mileage deductions, depending on the company’s travel and expense policies, they may be eligible for mileage reimbursements from their employers. So, how does it work? When an employee drives their own car for work, they can keep track of the miles traveled and submit their mileage reimbursement information to their employer.

The employer typically requires details like the purpose of the trip, the starting and ending locations, and the total miles driven. Once approved, your employer will reimburse you for the miles at a predetermined rate per mile. The mileage reimbursement rate is set by the employer but does not necessarily follow the IRS mileage rate, which we’ll outline next.

IRS mileage rate details

Each year, the IRS standard mileage rates change due to inflationary costs. The most recent mileage rates are:

2022 mileage rate

For the 2022 tax year (taxes filed in 2023), the IRS standard mileage rates are:

• 65.5 cents per mile for business
• 14 cents per mile for charity
• 22 cents per mile for medical purposes or moving purposes for qualified active-duty members of the armed forces

IRS mileage rate 2023

The IRS announced the tax year’s mileage rates for 2023 (taxes filed in 2024). Year over year, the business mileage deduction rates increased by $0.015 and medical miles decreased by $0.01. The rate for charitable miles is set by law and remains the same as the previous tax year.

The IRS mileage rates for 2023 are:

• $0.655 cents per mile for business
• $0.14 cents per mile for charity
• $0.16 cents per mile for medical purposes or moving purposes for qualified active-duty members of the armed forces

Applying the IRS mileage rate deduction to your taxes

If you’re in one of the categories listed above the way you deduct mileage for your taxes depends on your situation. For instance, 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 vary.

If you are:

• A self-employed individual. You should report their mileage as part of car and truck expenses on the Schedule C form. You’ll need to complete Part IV of the form. In addition to providing the number of miles driven during the tax year, you’ll need to answer a few questions about the vehicle, including when it was placed into service for business use.
• An Armed Forces reservist, qualified performing artist, fee-basis state or local government official. You should use Form 2106 and Schedule 1 (Form 1040) to claim mileage on taxes.
• An individual itemizing deductions and are claiming a deduction for medical or charity-related miles.
  • For charity mileage, you should use Schedule A (Form 1040) under the charitable deductions section. Provide the name of the charitable organization and a description of your volunteer work.
  • For medical mileage, use Schedule A (Form 1040) under the medical section.

Mileage tax deduction FAQs

Are there limitations to claiming mileage?

There are a few times when you won’t be permitted to claim the IRS standard mileage rate option on your tax return. 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
• Claimed the special depreciation allowance for the vehicle
• Claimed actual car expenses after 1997 for a leased vehicle
• Are a rural mail carrier who receives a qualified reimbursement

Do I need to keep records of my mileage?

Yes! 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 Internal Revenue Service (IRS) wants to see them. Contemporaneous sounds like a mouthful, but really the definition is simple. It 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 create a mileage log from your computer – but there are also smartphone apps that can make tracking mileage a lot more convenient.

In addition to keeping diligent mileage records, hang onto 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), these expenses may be tax deductible.

Can I deduct mileage going to and from a workplace?

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 independent contractors or small business owners, the trip from home to your main business location, such as an office or store, is not deductible. Trips driven to other business locations, such as to call on clients from the main place of business, are deductible.

For rideshare drivers, 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 a mileage expense on your taxes.

Note: If your home office is your main business location, then trips from home to other business locations are deductible.

Get help with tax mileage deductions

We understand you might want some help when it comes to claiming mileage on your taxes. That’s why  H&R Block is here to help.

Have a side business? Take control of your taxes and get every credit and deduction you deserve. File with H&R Block Online Deluxe (if you have no expenses) or H&R Block Self-Employed Online (if you have expenses) for easy tax preparation.

Have questions about self-employment taxes and other small business tax issues? Rely on our team of small business-certified tax pros to get your taxes right and keep your business on track. Find out how Block Advisors can help with your small business tax preparation.

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