Business driving can be claimed at a set rate per mile, which removes the need to track every running cost of the vehicle.
It does not remove the need to track the driving itself. Whichever method is used, the claim rests on a record of the journeys made, kept at the time, and that is where most claims are won or lost.
This covers what the rate is intended to cover, who can use it, what a record has to contain, why commuting is treated differently, how it works for drivers who do it for a living, and how it compares with claiming actual costs.
What Are IRS Standard Mileage Rates?
The IRS sets standard mileage rates each year (sometimes mid-year as well) as an optional, simplified way to calculate a deduction for the business, medical, charitable, or moving use of a personal vehicle. Instead of tracking every fuel receipt and repair bill, you multiply your miles driven by the applicable rate.
Where an employer reimburses driving, the arrangement has to require the employee to substantiate the journeys and return anything paid above them. A flat allowance paid regardless of actual mileage is usually treated as pay, which surprises both sides equally.
Anu Gupta, CA, EA, B.Tech · LinkedIn2025 Standard Mileage Rates
| Purpose | 2025 Rate |
|---|---|
| Business driving | 70 cents per mile |
| Medical driving (eligible taxpayers) | 21 cents per mile |
| Active-duty military moving | 21 cents per mile |
| Charitable driving | 14 cents per mile (set by statute, rarely changes) |
Who Can Use the Standard Mileage Rate?
You must elect to use the standard mileage rate in the FIRST year the vehicle is available for business use. If you use actual expenses in year 1, you cannot switch to standard mileage for that vehicle. Additional restrictions:
- Cannot use standard mileage if you claimed Section 179 expensing or bonus depreciation on the vehicle.
- Cannot use standard mileage if you applied MACRS depreciation to the vehicle in any prior year.
- Cannot use standard mileage for vehicles used for hire (fleet operators, rideshare companies with multiple vehicles).
- Cannot use standard mileage if you operate 5 or more vehicles simultaneously (fleet).
- Can switch from standard mileage to actual expenses in a subsequent year (but not back).
Mileage Log Requirements
The IRS requires adequate records to substantiate mileage deductions, the standard mileage rate does NOT eliminate record-keeping requirements. For each trip, document:
- Date of travel
- Destination (name or address)
- Business purpose of the trip
- Miles driven
- Odometer reading at start and end (good practice, not always mandatory)
Pro Tip: Use a mileage tracking app (MileIQ, Everlance, TripLog, or even Google Maps timeline) to capture trips automatically. A contemporaneous log is far more credible in an audit than a reconstructed one.
Commuting Is Never Deductible
Driving from your home to your regular place of business is commuting, never deductible regardless of how far you travel. Exceptions:
- Driving from your regular office to a client or job site: deductible business miles.
- If your home qualifies as your principal place of business (legitimate home office): driving from home to any other business location is deductible.
- First and last trip of the day to a temporary work location (not your regular office): may be deductible, consult a CPA.
Rideshare and Delivery Drivers
Uber, Lyft, DoorDash, Instacart, and similar drivers are self-employed and can deduct business mileage. Key points:
- Track ALL miles from the moment you activate the app to the moment you deactivate it, not just when you have a passenger/delivery.
- The standard mileage method is often more valuable than actual expenses for high-mileage drivers.
- 1099-K from the platform reports gross fares, subtract business expenses including mileage to arrive at net profit.
Standard Mileage vs Actual Expenses: Which Is Better?
| Factor | Favors Standard Mileage |
|---|---|
| Vehicle type | Older, low-value vehicles (depreciation element embedded in rate is fixed) |
| Miles driven | High mileage (more miles = more deduction) |
| Record-keeping | Simpler, just mileage log |
| New/expensive vehicle | Actual expenses may be better if Section 179 or bonus depreciation is available, but see restriction above |
Medical and Moving Mileage
Medical mileage (21 cents/mile in 2025) can be deducted as part of medical expenses on Schedule A, subject to the 7.5% AGI floor. Moving mileage at 21 cents/mile is available only to active-duty military members who move pursuant to military orders.
Charitable Mileage
Driving for a qualified charity (delivering meals, transporting items, etc.) is deductible at 14 cents/mile, a rate set by statute and rarely adjusted for inflation. Keep the same log records as for business mileage.
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Frequently Asked Questions
Can I deduct parking and tolls in addition to the mileage rate?
Yes. Parking fees and tolls paid for business driving are deductible in addition to the standard mileage rate. They are not included in the cents-per-mile rate.
What if I use my vehicle for both business and personal purposes?
Only business miles are deductible. Track total miles and business miles for the year; deduct the business percentage.
Does the standard mileage rate include depreciation?
Yes. The IRS embeds a depreciation component in the standard mileage rate. This affects your adjusted basis in the vehicle if you later sell it, the IRS requires you to reduce basis by the depreciation portion of each year's standard mileage deduction.
How should an employer reimburse employees for business driving?
Through an arrangement that requires the employee to substantiate the journeys and to return anything paid in excess of them. Where those conditions are met, the reimbursement is generally not treated as pay. Where they are not, a flat allowance paid regardless of actual driving is usually treated as compensation, which surprises both sides. The distinction is in how the arrangement operates rather than in what it is called.
Why do the rates for different purposes differ so much?
Because they are set on different bases. The business figure is intended to approximate the full cost of operating a vehicle, including its depreciation. The rates for other purposes reflect a narrower measure of cost, and the charitable one is fixed in legislation rather than adjusted annually, which is why it has not moved with the others. Take each from the current guidance rather than assuming one applies to all.
Written by
Anu Gupta, CA, EA, B.Tech
Anu works with US businesses on tax and entity questions at Profitjets, from choosing a structure to the filings that follow it. She writes about the decisions owners make once and then live with for years. Connect on LinkedIn
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