Deducting Auto Expenses

How do I deduct vehicle expenses for business? 

If you are self-employed and use your personal vehicle for business purposes, you can usually deduct your business expenses for that vehicle. You generally can choose from two ways of deducting: either claim the standard mileage rate, or report the actual expenses incurred while carrying out business-related activities. 

What is the standard mileage rate for the vehicle expense deduction? 

Claiming the standard mileage rate is the simpler option. For 2024, the rate is 67 cents per mile. 

With the mileage rate, you won’t be able to claim any actual car expenses for the year. You cannot also claim lease payments, fuel, insurance and vehicle registration fees. If you use your vehicle for both business and personal use, you can deduct only the business miles. 

To use the standard mileage rate for your personal vehicle, you should use it the first year that your vehicle is available for use in your business. In later years, you can choose to use either the standard mileage rate or actual expenses. For leased vehicles, if the standard mileage rate is the preferred method, you’ll have to use that method for the entire lease period. 

Once you’ve settled on the standard mileage rate for your vehicle on your return, you can’t revoke the choice for that year. For example, if you claim the standard mileage rate and your return is accepted, if you must amend that return for some reason, the standard mileage rate must be used on the amended return too. You can, however, switch to the expense method on next year’s return. 

How do I claim the deduction for actual vehicle expenses? 

To claim actual vehicle expenses, you can include: 

• Depreciation 

• Licenses 

• Gas and oil 

• Tolls 

• Lease payments 

• Insurance 

• Garage rent 

• Parking fees 

• Registration fees 

• Repairs 

• Tires 

As with the standard mileage rate, you must divide your expenses between business and personal use. 

Can I deduct car loan interest deductions? 

As of this printing, auto loan interest is not deductible. 

Claiming vehicle expense deduction is simple with 1040.com. 

To take a vehicle expense deduction for a business, simply add Your Business Vehicle while completing the segment of our walkthrough on self-employment income and expenses. 

Best of all, you can add self-employment forms to your tax return for no extra cost—our flat $29.99 is for everyone, including freelancers and independent contractors. Sign up or log in to see just how simple taxes can be.