The Tax Deduction for Business Mileage
This tax break is still alive and well if you're self-employed
Getting to work can be expensive for those who live a considerable distance from their places of employment. It would be nice if you could claim a tax deduction for some or all of the costs associated with commuting to your job, but most people cannot.
Commuting to and from work is considered a personal expense, so it's not tax deductible any more than that cup of coffee you grabbed on your way. There are some exceptions, but they're unfortunately not available from 2018 through 2025. The Tax Cuts and Jobs Act of 2017 (TCJA) eliminated most miscellaneous itemized deductions, including the one for miles driven for work purposes.
These are the rules for tax years through 2017, and perhaps again in 2026 (assuming the TCJA expires in 2025).
Traveling Away From Home
What's deductible and what's not begins with your "tax home." According to the Internal Revenue Service in Publication 463:
"Generally, your tax home is your regular place of business or post of duty, regardless of where you maintain your family home. It includes the entire city or general area in which your business or work is located."
In plain English, commuting might qualify as an itemized deduction if your employer requires that you travel from one business location to another, such as from your regular place of employment to a branch office, or anywhere else for the purpose of doing business on your employer's behalf. Your employer can't reimburse you for the mileage, however, and you can't deduct expenses associated with traveling from your own home to your tax home.
When You're Assigned to Temporary Work
The IRS also allows a deduction for mileage when a taxpayer is "traveling away from home" for a temporary assignment. Again, "away from home" means your tax home, not necessarily where you live. If you drive from home to your regular place of employment, it's not deductible, but if your employer requires that you work somewhere else, this mileage may be deductible.
According to IRS Publication 463:
"A temporary assignment in a single location is one that is realistically expected to last (and does, in fact, last) for one year or less."
This temporary location is considered to be your new place of employment for a period of time.
The Bottom Line
If you travel 800 miles a month from home to work on an offshore oil rig, this does not qualify. Even if the location of the rig changes, your commuting expenses would be a non-deductible personal expense because each rig is your regular place of employment and it's your tax home.
But if your employer puts you on desk duty in its home office for a period of time with the understanding that you will return to work on the rig in less than a year, travel to this location qualifies. If you have to drive from the home office to the rig to do an errand for your employer, this qualifies, as does driving from the office—or from the rig, for that matter—to a client's or customer's location or a business meeting.
The Standard Mileage Rate vs. Actual Expenses
So what exactly can you deduct? The standard mileage rate was 53.5 cents per mile in tax year 2017. You had the option of claiming this or a percentage of your actual vehicle expenses instead, including gas, insurance, parking, tolls, repairs, and depreciation.
The percentage is your business miles versus personal miles. In other words, if you drive 36,000 miles a year with 18,000 miles dedicated to business use and 18,000 to personal travel, you can deduct 50 percent of your actual expenses.
If you qualify, you can claim this deduction as an employee business expense using Form 2106 and Schedule A with tax returns through tax year 2017. You can generally go back and amend your tax returns for up to three years if you qualify but failed to claim the deduction.
And yes, you must itemize rather than take the standard deduction to claim this expense. Your total employee business expenses must exceed 2 percent of your adjusted gross income. You can claim a deduction for the balance over this amount.
The rules change dramatically if you’re self-employed. Whenever you leave your business location, whether you work from home or maintain a business location elsewhere, you can begin tallying up your miles and costs from the moment you leave that place as long as you’re traveling for business purposes. In this case, you can claim a standard mileage rate of 54.5 cents per mile in tax year 2018 (58 cents per mile beginning on January 1, 2019). The rate is indexed for inflation so it can be expected to increase periodically.
The "business use" rule still applies. If you visit a client 20 miles away from your place of business, you can take a deduction based on 40 miles for the round trip. But if you make a side trip on your way home to stop for dinner with friends, and if the restaurant is 10 miles out of your way, your deduction is still based on 40 miles. Those extra 20 miles don’t count—unless, of course, you’re meeting for business purposes.
In this case, you would claim your business mileage on Schedule C. You would not have to itemize to claim the deduction.
The TCJA Isn't Necessarily Permanent
The TCJA is set to sunset or expire at the end of December 2025 unless Congress takes steps to renew it. Should that not happen, it's possible that miscellaneous itemized deductions might return to the tax code in 2026. But you're more or less out of luck until that time if you must travel for work purposes and you're not self-employed.
And you can still claim a deduction for miles driven for purposes of medical care. The medical expense deduction survived the TCJA and the rate for these miles is 18 cents in 2018 (20 cents per mile beginning on January 1, 2019). But your overall itemized medical expenses must exceed 7.5 percent of your adjusted gross income (AGI) in 2018 and 10 percent of your AGI beginning in 2019. And yes, you must itemize to claim these miles, too.
NOTE: Tax laws change periodically, and you should consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and is not a substitute for tax advice.