Standard Mileage vs Actual Expense Method of Deducting Vehicle Expenses in 2025

This includes keeping track of gas, oil, repairs, insurance, registration fees, and depreciation. The actual expense method allows you to deduct the actual expenses of using your vehicle for business, rather than just the standard mileage rate.

One advantage of the actual expense method is that if you have a high-value vehicle and drive a lot of business miles, you may be able to deduct more using this method than with the standard mileage rate. However, if you drive very few business miles, the standard mileage rate may result in higher deductions.

It’s important to note that once you choose the actual expense method in the first year, you are typically locked into using this method for the entire life of the vehicle. The only exception to this is if you used straight-line depreciation for the vehicle.

In conclusion, the decision between the standard mileage rate and the actual expense method depends on your specific circumstances and how you use your vehicle for business purposes. It’s recommended to consult with a tax professional to determine the best method for maximizing your deductions while staying compliant with IRS regulations. Then, multiply that number by the business use percentage. The business use percentage is calculated by dividing the business miles by the total miles (both business and personal) driven during the year.