Mileage Deduction Guide for Self-Employed: Rates, Rules, and Tracking

The Mileage Deduction: Big Savings on Wheels

If you drive for business, the mileage deduction can save you thousands. At the 2026 standard rate of $0.70 per mile, driving just 5,000 business miles saves you $3,500 in deductions.

Many freelancers miss this deduction entirely because they don't track their miles. Let's fix that.

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2026 IRS Mileage Rates

The business rate is the one that matters for freelancers. It's designed to cover gas, insurance, depreciation, maintenance, and wear on your vehicle.

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Two Methods: Standard vs. Actual

Standard Mileage Method

Multiply your business miles by $0.70. Simple.

Example: 8,000 business miles x $0.70 = $5,600 deduction

You can also deduct parking fees and tolls on top of the standard rate.

Actual Expense Method

Track all vehicle costs and deduct the business percentage:

• Gas and oil
• Insurance
• Repairs and maintenance
• Tires
• Registration and license fees
• Depreciation
• Lease payments (if leasing)

Example: Total vehicle costs = $9,000. Business use = 60%. Deduction = $5,400.

Which Method Is Better?

The standard rate is simpler and usually better for newer, fuel-efficient cars. The actual expense method may win for older vehicles with high maintenance costs or expensive vehicles with high depreciation.

Important: If you use the standard rate in the first year, you can switch to actual expenses later. But if you start with actual expenses, you're locked in for that vehicle.

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What Counts as Business Miles

Deductible:

• Driving to meet clients
• Trips to the post office, office supply store, or bank for business
• Traveling to a coworking space (if not your primary office)
• Driving between two work locations
• Going to conferences, networking events, or training
• Trips to your accountant's office

NOT Deductible:

• Commuting from home to a regular office
• Personal errands, even during the workday
• Driving to pick up lunch (unless it's a business meal)

The home office exception: If you have a qualifying home office, ALL business driving from home counts as business miles (no commute to subtract).

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How to Track Your Miles

The IRS requires a "contemporaneous" mileage log. That means you need to record your miles at or near the time of each trip. Reconstructing a year of mileage at tax time doesn't hold up in an audit.

What to record for each trip:

1. Date
2. Starting location
3. Destination
4. Business purpose
5. Miles driven

Tracking methods (best to worst):

1. Mileage tracking app — automatic GPS tracking (MileIQ, Everlance)
2. Spreadsheet — manual entry after each trip
3. Paper logbook — old school but IRS-accepted

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Common Mistakes

1. Not tracking at all — "I drive a lot for business" isn't proof. You need a log.
2. Claiming commute miles — Home to office is never deductible (unless you have a home office).
3. Double-dipping — You can't claim the standard rate AND deduct gas separately.
4. Forgetting parking and tolls — These are deductible on TOP of the standard mileage rate.
5. Not establishing a home office — A qualifying home office makes your first trip of the day deductible.

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Maximize Your Mileage Deduction

TaxPilot helps you categorize vehicle expenses and calculate your optimal deduction method. No more wondering if you should use standard vs. actual — we'll show you which saves more. Try our free tax calculator to estimate your vehicle deduction.