Business Vehicle Deductions: What You Need to Know as a Small Business Owner

If you’re running your own business and using your car for work, you might be leaving serious money on the table. Good news: the IRS lets you deduct vehicle expenses — but you have to follow a few important rules.

Let’s break it down in plain English.

Two Ways You Can Deduct Your Car for Business

When it comes to writing off your car, you have two choices:

1. Standard Mileage Method

This is the easy way. You just keep track of how many miles you drive for business, and the IRS gives you a set amount per mile.(For 2024, it's 67 cents per mile.)

✅ You don’t have to keep gas or repair receipts.

✅ Just track your business miles.

Best for: If you drive a lot but don’t have crazy maintenance costs.

2. Actual Expense Method

This one is a little more work, but sometimes saves you more money.You add up what you actually spent on gas, repairs, insurance, lease payments, and even depreciation.

✅ You still have to track miles (to figure out what % of your car use is for business).

✅ You need to save all your receipts.

Best for: If your car is expensive to run or you drive fewer business miles.

A Few Rules You Need to Know

• You must keep a mileage log.(It can be an app like MileIQ, a spreadsheet, or even a little notebook.)

• Be realistic about business use. If you say your car is used 100% for business, the IRS will want proof.(Most people use their car for both work and personal stuff.)

• Pick your method carefully. Once you start with one method, it’s not always easy to switch.

• Save your receipts. Especially if you're using the Actual Expense Method. Gas, repairs, insurance — everything!

  
  

So, Which Way Saves You More?

It depends.

• If you drive a lot for work and your car isn’t too expensive to maintain, standard mileage might win.

• If you barely drive but have big car expenses, actual expenses might give you a bigger deduction.