Standard Mileage Deduction
A simplified method of deducting vehicle expenses based on business miles driven, using the IRS-published standard mileage rate.
Detailed Explanation
For 2025, the standard mileage rate is 70 cents per business mile. The taxpayer multiplies business miles by the rate to compute the deduction. The alternative is the Actual Expense Method (gas, insurance, depreciation, repairs, prorated by business use). Once the actual method is used, the standard rate may not be used in subsequent years for that vehicle. Detailed mileage logs (date, destination, purpose, miles) are required to substantiate the deduction.
Key Points
- 2025 business standard mileage rate is 70 cents per mile (the IRS sets the rate annually).
- Alternative is the Actual Expense Method: gas, insurance, repairs, and depreciation prorated by business use.
- To use the standard rate on a vehicle, you must choose it in the first year that vehicle is placed in service.
- Commuting between home and a regular workplace is personal and not deductible.
- A contemporaneous log (date, destination, purpose, miles) is required to substantiate the deduction.
Practical Example
A self-employed photographer drives 12,000 business miles in 2025. Under the standard mileage method the deduction is 12,000 x $0.70 = $8,400, plus business parking and tolls. If actual costs (gas, insurance, depreciation, repairs) on a vehicle driven 60% for business were $20,000, the actual method would yield $12,000, making it the better choice that year if records support it.
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