What is the Mileage Deduction?

A mileage deduction is a tax deduction that allows self-employed individuals, freelancers, and small business owners to reduce their taxable income based on the business miles they drive. The IRS permits two methods for claiming vehicle expenses: the standard mileage rate and the actual expense method. Under the standard mileage rate, you multiply your total business miles driven during the year by the IRS-published rate per mile -- for 2024, that rate was 67 cents per mile. This deduction covers the cost of fuel, depreciation, maintenance, and insurance associated with the business use of your vehicle, all wrapped into a single per-mile figure. For freelancers who drive to client meetings, job sites, or supply runs, the mileage deduction can meaningfully reduce their tax bill without requiring detailed expense receipts for every fill-up.

The mileage deduction works by requiring you to log every business trip -- the date, starting point, destination, purpose, and miles driven. At year end, you total your business miles and multiply by the applicable IRS rate. The result is deducted from your gross self-employment income on Schedule C of your federal tax return. Only miles driven for genuine business purposes qualify: client meetings, site visits, picking up business supplies, traveling between job sites, and attending professional development events. Commuting from home to a regular office does not qualify, but if you have a home office that qualifies as your principal place of business, trips from home to client locations are deductible. The IRS may request your mileage log as documentation if you are audited.

For freelancers and small business owners, the mileage deduction is one of the most commonly overlooked tax benefits. Many self-employed individuals drive frequently for work -- photographers travel to shoot locations, consultants visit client offices, contractors source materials -- but fail to keep records. Even modest business driving can add up: 5,000 business miles at the 2024 rate of 67 cents per mile equals a $3,350 deduction, which at a 25% effective tax rate saves $837.50 in taxes. The key is consistent recordkeeping. Apps like MileIQ, Everlance, or even a simple spreadsheet can automate or simplify mileage logging. Tracking every business trip as you drive -- rather than reconstructing from memory at year end -- produces more accurate records that withstand IRS scrutiny.

The standard mileage rate method and the actual vehicle expense method both allow you to deduct vehicle costs, but they work differently. The standard mileage rate uses a flat per-mile amount set by the IRS each year, covering all vehicle costs in one simple calculation. The actual expense method requires tracking every vehicle-related cost -- fuel, oil changes, tires, repairs, insurance, registration, and depreciation -- and then multiplying the total by the percentage of miles driven for business. The actual method can produce a larger deduction if you drive a vehicle with high operating costs or if your business use percentage is very high. However, it requires more detailed recordkeeping. If you use the actual expense method in the first year you use a car for business, you generally cannot switch to the standard rate for that vehicle in later years.

To calculate your mileage deduction: First, decide which method you will use -- standard mileage rate or actual expenses. Second, if using the standard rate, start logging every business trip immediately at the beginning of the year using a mileage tracking app or a paper log. Record date, origin, destination, purpose, and odometer readings. Third, at year end, total your business miles and multiply by the current IRS rate. Fourth, enter the result on Schedule C, Part II (Expenses), under 'Car and truck expenses.' Fifth, retain your mileage log and any supporting documentation -- receipts, appointment records, or client communications -- for at least three years in case of an audit. Sixth, if using the actual expense method, total all vehicle costs, calculate your business use percentage (business miles divided by total miles), and apply that percentage to your total costs.

Eonebill helps freelancers keep their business finances organized, which makes tax season easier. When you track all your client engagements and invoices in one place, it is easier to correlate trips with specific client work and document the business purpose of each drive. Try our [free invoice generator](/free-tools/invoice-generator) to keep your billing professional and organized, and visit [Eonebill pricing](/pricing) for plans that support your self-employed business management needs.

1. Failing to keep a contemporaneous mileage log -- reconstructing your driving from memory at year end produces inaccurate records that are hard to defend in an audit. 2. Deducting commuting miles -- travel from your home to a regular workplace is never deductible; only trips to client locations, job sites, or supply runs qualify. 3. Using the wrong IRS rate -- the standard mileage rate changes each year; always confirm the current rate before filing. 4. Mixing personal and business trips in one log -- if you make a personal stop during a business trip, you may need to allocate the miles proportionally. 5. Not tracking total miles -- to calculate your business use percentage (required for the actual method and useful for the standard method), you need both business and total annual miles.

Learn more about related topics: [Tax Credit](/glossary/tax-credit), [Sole Proprietorship](/glossary/sole-proprietorship), [Job Costing](/glossary/job-costing), [Bad Debt Expense](/glossary/bad-debt-expense).