How To Calculate Mileage for Taxes

Calculating mileage for tax purposes involves choosing between two main methods: the standard mileage rate method and the actual expense method. Here’s how to use each:

Standard Mileage Rate Method

1. Determine Business Miles: Keep a log of all miles driven during the year, noting which are for business and which are personal. You can use a mileage log or tracking software like Easy Expense or Driversnote. Many business management tools, such as Workyard, also offer built-in mileage tracking for streamlined record-keeping.
2. Know the Mileage Rate: The IRS sets a standard mileage rate each year. For 2025, the rate is 70 cents per mile for business use.
3. Calculate Deduction: Multiply the total business miles by the standard mileage rate. For example, if you drove 10,000 miles for business in 2025:10,000 miles × 0.70 = 7,000. You can claim $7,000 as a deduction on your tax return.
4. Report on Taxes: Use Form 1040 and Schedule C to claim business mileage expenses. Complete Part II, Line 9 on Schedule C for the standard mileage deduction.

Actual Expense Method

1. Track Expenses:
   Keep detailed records of all vehicle expenses related to business use, including:
   • Gas and oil
   • Repairs and maintenance
   • Insurance
   • Registration fees
   • Depreciation (if applicable)
2. Calculate Business Use Percentage: Determine the percentage of your vehicle’s use that is for business. This can be done by dividing business miles by total miles driven.
3. Calculate Deduction: Multiply each expense by the business use percentage. For example, if your insurance costs $1,000 annually and 80% of your driving is for business:1,000 × 0.80 = 800. You can claim $800 as part of your deduction.
4. Report on Taxes: Use Form 1040 and Schedule C for business expenses. If claiming depreciation, you’ll also need to complete Form 4562.

Choosing the Right Method

• Standard Mileage Rate: Easier to calculate and requires less record-keeping, but individual expenses like repairs cannot be deducted.
• Actual Expense Method: More complex but allows deducting specific expenses. Beneficial if you have high vehicle expenses or significant depreciation.

Additional Resources for Mileage Tracking & Tax Compliance

For professionals looking to track mileage accurately and manage tax deductions efficiently, these resources may be helpful:

• Raken Review – A project management tool with built-in mileage tracking for accurate business deductions.
• Kickserv Review – A field service management software that simplifies mileage and expense tracking.
• GPS Breadcrumbs – Helps track actual travel routes for tax deduction accuracy.
• QuickBooks Desktop Payroll – Useful for managing tax-related mileage reimbursements.
• Illinois Labor Laws – Ensures compliance with state-specific reimbursement policies.
• Oregon Break Laws – Important for understanding how travel time may affect work-hour regulations.

References