You may qualify for tax deductions based on the miles driven if you use your vehicle for business, charitable, medical, or moving purposes. Understanding the options and rates for 2025 can help you maximize your deductions.
2025 Mileage Rates
The IRS standard mileage rates for 2025 are as follows:
- Business (self-employed): 70 cents per mile
- Charitable purposes: 14 cents per mile
- Medical purposes: 21 cents per mile
- Moving (military only): 21 cents per mile
If your vehicle is used exclusively for business, you may deduct the entire cost of ownership and operation (subject to certain limits). You can only deduct the portion attributable to business use for vehicles used for business and personal purposes.
Methods for Calculating Deductions
You can calculate your deductible vehicle expenses using the standard mileage rate or the actual expense method. If you qualify for both, it’s advisable to calculate your deduction using each method to determine which offers the larger deduction.
- Standard Mileage Rate
This method allows you to multiply the total business miles driven by the applicable mileage rate (e.g., 70 cents per mile for business use in 2025) for a vehicle you own or lease. To qualify, you must meet the following requirements:
- You must not operate a fleet of five or more cars simultaneously.
- You must not have claimed a depreciation deduction using any method other than straight-line.
- You must not have claimed a Section 179 deduction or special depreciation allowance on the vehicle.
- You must not have claimed actual expenses after 1997 for a car you lease.
If you own the car, you must choose the standard mileage rate in the first year it is available for business use. You can switch between the standard mileage rate and the actual expense method in subsequent years.
For a car you lease, you must use the standard mileage rate method for the entire lease period (including renewals) if you choose the standard mileage rate.
Actual Expense Method
Using this method, you calculate the total costs of operating your vehicle for the portion of its business-related use. Expenses you can include are:
- Gas, oil, and repairs
- Tires
- Insurance and registration fees
- Licenses and depreciation (or lease payments)
For example, if 60% of your vehicle use is for business and your total annual vehicle costs are $10,000, your deduction would be $6,000 (60% of $10,000). This method may result in a higher deduction if you have significant vehicle-related expenses.
Documentation Tips
Proper documentation ensures compliance and protects you in the event of an IRS audit. To claim vehicle-related deductions, maintain detailed and accurate records, including:
- A business mileage log, noting the date, purpose, and miles driven for each trip.
- Receipts and invoices for vehicle-related expenses if using the actual expense method.
- Document total miles driven during the year, including personal and business use.
Understanding the 2025 mileage rates and calculating your deductions accurately can reduce your tax burden and maximize your vehicle-related expenses. Whether you choose the standard mileage rate or the actual expense method, meticulous record-keeping is key to maximizing your deduction. If you’re unsure which method is best for you, contact your Stephano Slack tax professional at 610-687-1600 or [email protected] to discuss your options.
Author Jessica Parson Gartensleben, Esq., LLM, specializes in helping high-net-worth individuals and families preserve their wealth by reducing their tax burdens. With her expertise in estate and trust planning, generational wealth transfers, and family business succession, she can guide you through every step of securing your financial legacy. Contact Jessica today at 610.235.4400 or [email protected] for personalized support tailored to your unique needs.
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