If you use your vehicle for business or certain other activities, like traveling for medical treatment or charitable work, you may be able to deduct your costs for tax purposes. But the IRS rules for doing so are strict. Many changed when the Tax Cuts and Jobs Act (TCJA) went into effect in 2018.
Learn the IRS rules for deducting your mileage on your tax return, plus how to choose a mileage method, what records you need, and how to claim the deduction at tax time.
What Is the Mileage Rate for 2021?
|Purpose||2020 (use for tax return due in 2021)||2021 (use for tax return due in 2022)|
|Business mileage||57.5 cents per mile||56 cents per mile|
|Medical and moving mileage||17 cents per mile||16 cents per mile|
|Charitable mileage||14 cents per mile||14 cents per mile|
The chart above shows the standard IRS mileage rates for tax years 2020 and 2021. The standard mileage rate is the amount you can deduct based on miles driven, rather than your actual vehicle expenses. Businesses often use these rates to reimburse employees for using their personal vehicles for job-related travel. If you’re self-employed, you can use them to determine your own deduction.
Rates for 2021 are slightly lower than they were in 2020. The drop reflects lower fuel prices and other reductions in driving-related expenses due to COVID-19.
Choosing a Mileage Method
There are two ways to calculate your mileage for your tax return: using the standard mileage rate or calculating your actual costs.
The standard mileage rate is a simplified way of deducting your mileage based on the number of miles driven instead of your actual costs. You keep track of your miles driven for IRS-approved purposes and multiply them based on the standard mileage rate. For example, if you drive your vehicle 1,000 miles for IRS-approved business purposes in 2021, you’ll be able to deduct $560 based on the rate of 56 cents per mile for that tax year.
To use the standard mileage rate for a car you own, you need to choose this method for the first year you use the car for business. You can then choose between deductions based on the standard mileage rate or actual costs in subsequent years. If you choose the standard mileage rate for a vehicle you’re leasing, you’ll need to stick with that method for the entire lease.
If you choose this method, you’ll need to log your miles. You could keep a paper mileage log in your vehicle or download a mileage app to keep track.
You can choose to deduct the actual costs of using your vehicle instead of deducting your mileage. If you’re using a vehicle for both business and personal reasons, you can deduct only the costs for business use. You can include the following expenses:
- Oil, tires, and repairs
- License and registration fees
- Depreciation of the vehicle or lease payments attributable to the percentage of miles you drive it for business purposes
You’re required to keep records, such as receipts, to document your vehicle expenses. Generally, you should keep old tax records for at least three years after you’ve filed your return.
If you qualify for both mileage methods, try calculating both to see which results in a bigger deduction.
Who Can Claim Mileage Rate Deductions for Business?
You can’t claim business mileage deductions for your commuting expenses between your home and your regular place of work. Your employer may reimburse you for some job-related travel, such as if you drive from your primary work location to meet with clients.
However, you aren’t allowed to deduct mileage that your employer doesn’t reimburse you for. Under the TCJA rules, the itemized deduction for unreimbursed employee expenses was suspended from 2018 to 2025. The only exceptions are for military reserve members, state and local employees paid on a fee basis, people who have job expenses related to an impairment, and some performing artists.
The rules are different if you’re self-employed, though. You still can’t deduct your mileage if you commute from your home to your primary business. But if you’re traveling from your business to meet with clients or visit a project site, you can deduct your mileage. This applies even if your business is based out of your home.
The tax rules for ride-share drivers are similar. Ride-share drivers can deduct mileage according to the standard IRS rate or their actual costs.
Who Can Claim Mileage-Rate Deductions for Moving?
You can deduct your mileage when moving only if you’re active-duty military and you’ve been ordered to a permanent change of station. Otherwise, this mileage deduction isn’t allowed. The TCJA suspended the deduction of moving expenses for all nonmilitary taxpayers from 2018 until 2025.
Who Can Claim Mileage-Rate Deductions for Medical Reasons?
You can take a medical tax expense deduction only if your overall unreimbursed medical costs exceed 7.5% of your adjusted gross income (AGI). You can deduct your mileage at the standard rate of 17 cents per mile for 2020 and 16 cents per mile for 2021, or you can deduct your actual costs of gas and oil. Deducting parking costs and tolls is also allowed.
You’re allowed to deduct mileage for your own treatment, but also if you’re transporting a child to receive treatment or if you’re visiting a mentally ill dependent as part of a recommended treatment.
Who Can Claim Mileage-Rate Deductions for Charitable Reasons?
If you travel to perform volunteer work, you can deduct the standard amount of 14 cents per mile. Alternatively, you can deduct your costs of oil and gas but not other vehicle expenses like depreciation, maintenance, insurance, and fees. Regardless of the method you choose, you can also deduct your costs for parking and tolls while volunteering.
How to Claim the IRS Mileage Rate
If you’re claiming a deduction for business mileage, you’ll report it using Schedule C on Form 1040. To claim mileage deductions for moving, medical treatment, or charitable deductions, you’ll need to itemize on your return. You’ll do so using Schedule A on your Form 1040.
Regardless of what type of mileage you’re deducting, be sure to keep thorough records. Keep a mileage log if you use the IRS standard mileage rate, and hold onto receipts if you’re deducting your actual costs. Be sure to store them with your other tax records so you’re covered in the event of an audit.