CashoutGlossary / Mileage deduction
Mileage deduction
A tax deduction for driving your own car for business, figured with the IRS standard mileage rate or your actual costs, mostly for self-employed workers.
The mileage deduction lets you subtract the cost of driving your own car for business from your business income. It is mainly for the self-employed: delivery and rideshare drivers, contractors and anyone with a side business reported on Schedule C. The IRS says most employees cannot deduct unreimbursed car expenses, so a W-2 server who drives to work gets no deduction for it.
There are two ways to figure it:
- Standard mileage rate: business miles times the IRS rate. For 2026 that is 72.5 cents a mile from January 1 through June 30 and 76 cents from July 1 through December 31.
- Actual expense method: your real gas, insurance, repairs, depreciation and similar costs, times your business-use percentage.
With either method, business parking fees and tolls are deductible on top. For a 1099 worker the deduction is worth more than it looks, because it lowers your profit, and profit is what both income tax and self-employment tax are figured on.
The most common mistake is counting your commute. Driving between home and your regular place of work isn't deductible, no matter how far you live. The second is skipping the mileage log: the law requires you to back up car expenses with adequate records.
Related terms
Standard mileage rate · Actual expense method · Mileage log · Business-use percentage · Schedule C
