Mileage Deduction Rules: Claiming Unreimbursed Mileage on Your Tax Return

Employees, self-employed individuals and other taxpayers have used the optional IRS standard mileage rate (or Safe Harbor Rate) to compute the deductible costs of operating an automobile for business in the past. If your company has not reimbursed you for your business mileage, you would want to claim the IRS standard mileage rate on your taxes. Claiming unreimbursed mileage would help you offset the work-related driving costs you incurred throughout the year. But deducting mileage for business on your tax return can be a tricky process. It’s important to follow the mileage deduction rules. Below, we break down how to deduct mileage for taxes — and the do’s and don’ts for when tax season rolls around.

What Are Mileage Deduction Rules?

If you are self-employed and use your vehicle for work, charity, medical, or moving purposes, you might be able to take a mileage deduction for the self-employed. This deduction can reduce your taxable income and minimize your total tax liability. Alternatively, individuals can use the actual car expense method. The difference in rules between the two methods are noted below:

• Standard mileage rate: This is a tax write-off for mileage set by the IRS based on miles driven and is considered the easiest method for those who are self-employed; the rate covers everything pertaining to using a car for business.  
• Actual car expense method: This allows you to claim deductions for car insurance, deductible repairs, and more. While it is more comprehensive in what it allows you to deduct, it requires you to keep track of a greater number of expenses beyond mileage, which takes more time and effort. According to the IRS, business owners and self-employed individuals can deduct the following expenses using this method:
  • Garage rent
  • Tires
  • Insurance
  • Lease payments
  • Gas
  • Parking fees
  • Tolls
  • Oil
  • Registration fees
  • Depreciation
  • Repairs

Keep in mind that the IRS might want to see documentation when writing off miles for taxes. Do your best to keep receipts and records of your mileage and expenses for gas and maintenance. Otherwise, you could face audits and penalties.

Standard Mileage Tax Deduction Rates

For the 2023 tax season, the standard mileage business deduction for miles driven between January 1 and December 31, 2022, was 65.5¢ per mile, which includes the costs of gas, maintenance and repairs, depreciation, and general wear. In 2024, this rate has gone up to 67¢ per mile. For medical and moving, the deduction is 21¢ per mile, and for charity driving, it’s 14¢.

Who Is Eligible for Mileage Tax Deductions?

The IRS has determined that if you want to claim the standard mileage deduction, you need to be the owner of the vehicle you use — or at least be leasing it.

• To qualify as an owner, you have to use the standard mileage rate during the first year you use the vehicle to conduct business. After that, you can choose between the standard mileage rate and the actual expense method. You may not use a fleet (more than five cars) at once, though you may use all the vehicles at different times. Additional qualifications include not claiming a section 179 deduction for your vehicle’s special depreciation allowance or taking deductions with anything but the straight-line method. 
• If you’re leasing, you must also use the standard mileage rate in the first year of business using your car and continue using this method for the whole life of the lease — even if you renew it. Those leasing their car(s) may not apply this deduction to fleet operations, either.

Prior to 2017, all employees could claim an un-reimbursed mileage tax write-off for travel expenses related to work. However, the Tax Cut and Jobs Act of 2017 suspended this deduction. The IRS doesn’t provide much additional detail on the mileage deduction eligibility requirements, but those who generally qualify include:

• Small business owners, including self-employed individuals filing with Schedule C or F
• Qualified performing artists
• Fee-based government employees
• Individuals traveling for medical reasons or volunteer work
• Armed forces reservists
• Freelancers
• Independent contractors

Mileage Deduction Rules for the Self-Employed

If you are claiming the mileage deduction as a self-employed individual, you’ll need to use Schedule C to report the mileage driven for business during the tax year. You should also indicate the date you began using the car for work and answer a few additional questions. 

It’s important to know what counts as business mileage in this report. You are only allowed to count trips taken after you’ve arrived at work. As a business owner, this means you may only count the trips taken from your work location to other locations of business, not to and from your home. Rideshare drivers, for example, can start counting their miles after they arrive at the home of their first passenger but not the ride from their starting point to the first passenger’s location. IRS Publication 463 provides additional detail.

Mileage Deduction Rules for Other Employees

Other employees can take a mileage tax write-off using Form 2016 to report miles and answer vehicle-related questions. The same mileage deduction rules for the self-employed apply to all other employees.

What You Can Claim

Here are specifics on what you can claim as a business mileage tax deduction:

• Trips From One Office to Another. You can deduct any miles incurred as a result of traveling from your office or work site to a second work location.
• Temporary Work Location. A temporary work location is “a place where your work assignment is realistically expected to last (and does in fact last) one year or less.” If this temporary location is your primary workplace, you can only deduct mileage between your home and the location if it’s outside of your normal metropolitan area. (If you have another regular workplace in addition to this temporary work site, you can deduct any mileage between your home and the temporary location.)
• Customer and Client Visits. Any mileage driven from your office to meet with customers, clients or business vendors can be deducted.
• Business-Related Errands. Miles incurred while running any business-related errands (i.e., trips to the bank, post office, etc.) can be claimed.
• One-Off/Secondary Jobs. Any travel incurred while working secondary jobs to make some extra cash (such as landscaping or housesitting) can be written off. This is only true if it is not a day off from your main job.
• Job Seeking. Any miles driven to find a new job in your current occupation are eligible for a deduction as long as you’re not looking for your first job.
• Medical Appointments. This includes driving to and from doctor’s appointments or picking up prescriptions.
• Volunteer Work. If you volunteer for a charity and need to use your vehicle to get there or to participate in the charity work itself, you might be able to claim the tax deduction.

What You Can’t Claim: Mileage Tax Deduction Limitations

It is important to note that employees can only claim business mileage. The IRS considers any travel from your home to a permanent work location commute. The same is true of travel to a principal location where you work for more than one year. The IRS does not consider any miles incurred during your daily commute to be eligible for a deduction.

Depending on the Tax Year, you can claim “X” (whatever the IRS rate is for that year) cents per mile as part of unreimbursed employee expenses, but only expenses over two percent of your adjusted gross income can be deducted. (If you are an independent contractor, or you’re self-employed, this two percent floor will not apply.) However, you are not eligible for a deduction after you have claimed any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, you cannot apply the standard business mileage rate to more than four vehicles used simultaneously.

In addition to the limitations on fleet operations and on those who claim the Section 179 deduction or use another depreciation deduction besides the straight-line depreciation method, you may also be disqualified from claiming the standard mileage rate deduction if you are a rural mail carrier receiving reimbursement or claimed actual car expenses for a leased car post-1997.

Other Considerations

When writing off miles for taxes, it’s vital to keep accurate records of your mileage and expenses to support any deductions claimed on your tax return. If you are selected for an audit (over one million audits occur each year), the IRS will want to see your mileage logs that include dates, destinations, and the reason for travel. Remember to also keep receipts for toll and parking fees, which may need to be claimed separately depending on the deduction you choose. If you deduct toll or parking fees, the IRS will require you to keep receipts of every transaction that show the amount, date, and location of each expense. 

Your mileage should be comprehensive and should be tracked while you’re on the job, as it will be more accurate than if you tried to backtrack later on. This can be done on paper, but now, smartphone apps make your mile tracking easier and more accurate. 

Another consideration to keep in mind with a tax write-off for mileage is that you may not claim both the actual expenses and mileage tax for a single vehicle in the same year. It’s best to consult with a tax professional or use a tax software program to ensure you are accurately and appropriately claiming miles on taxes.

Maximizing Your Return

Claiming miles on taxes can add up to a substantial deduction for many taxpayers, but the IRS has specific mileage deduction rules regarding when and how it can be claimed. If you are uncertain about the rules we’ve discussed above, consult with a tax professional who can evaluate your particular situation.

For further clarification on business versus commute mileage, read more here!

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Disclaimer: We prepared this material for informational purposes only. It is not intended to provide, and should not be relied upon for, tax, legal or accounting advice. Motus does not provide tax, legal, or accounting advice. For any such advice, you should consult your own advisors.