The 2025 standard mileage rate is 70 cents per business mile. Compare it against the actual-expense method, learn which trips count, and see a worked example of each.
Short answer: for 2025, the standard mileage rate is 70 cents per business mile, and it usually wins for people who drive a lot of miles in an inexpensive, fuel-efficient car. The actual-expense method — deducting the business-use percentage of everything you spend on the car — usually wins for expensive vehicles, low annual mileage, or heavy first-year depreciation. The catch: which method you use in the car's first business year can lock in your options, so the choice deserves five minutes of real math.
Vehicle costs are one of the biggest line items on a freelancer's Schedule C, and one of the most commonly fumbled — we put them high on our list of deductions self-employed people actually miss. This post covers what each method includes, which trips actually count as business miles, the switching rules, and a worked example.
The 70-cent rate isn't just gas money. It's an IRS-computed average of the full cost of operating a car per mile: depreciation, gasoline, oil, maintenance, repairs, tires, insurance, and registration. That's why you can't take the mileage rate and then also deduct your gas receipts or insurance — it's all baked in. The few things you can add on top: the business portion of parking fees, tolls, and (as a separate deduction) auto loan interest attributable to business use. The 2026 rate gets announced each December; use 70 cents for 2025 driving.
The appeal is simplicity: one log, one multiplication. Drive 10,000 business miles in 2025 and you deduct $7,000, no receipts required beyond the mileage log itself.
The actual method deducts your real costs, scaled by your business-use percentage — business miles divided by total miles for the year. Track everything you spend on the car:
If 60% of your miles are business, you deduct 60% of all of it. Depreciation is where this method can get dramatic: bonus depreciation is 100% and permanent for property acquired after January 19, 2025, though vehicles under 6,000 pounds are limited by the annual luxury-auto caps. Heavier vehicles play by different rules entirely — if you're shopping for a truck or large SUV for the business, see our guide to the tax deduction for vehicles over 6,000 pounds before you buy, because the first-year math changes completely.
This is where most of the money is won or lost. Commuting never counts — driving from home to a regular work location is personal, full stop, even with a logoed car and a work call on speaker. What does count:
Now the multiplier: if you have a qualifying home office as your principal place of business, trips from home to any business stop become business miles — there's no "commute" to disallow, because your commute is a hallway. For a freelancer who drives to clients from home every day, a legitimate home office can convert thousands of personal commuting miles into deductible ones. That interplay is one more reason to read our home office deduction guide alongside this one.
Here's the trap. If you use the standard mileage rate in the car's first year of business use, you keep the option to switch between methods in later years (with some depreciation adjustments — you must use straight-line depreciation if you switch to actual). But if you start with the actual method in year one and claim accelerated depreciation, you're locked out of the standard mileage rate for that car, forever. Leased cars have their own version: pick standard mileage on a lease and you must keep it for the entire lease term.
Practical play: unless the actual method wins decisively in year one (usually because of big first-year depreciation on a car you use heavily for business), start with standard mileage to preserve flexibility, then run the comparison annually.
Meet a consultant who drove 15,000 total miles in 2025, 12,000 of them business (80% business use), in a car that cost her $6,000 in gas, $1,800 in insurance, $1,200 in maintenance and tires, $400 in registration, with $3,500 of allowable depreciation.
Actual wins by about $1,900 here — high business-use percentage and meaningful depreciation tip the scales. Flip the facts to a paid-off Corolla driven 20,000 business miles cheaply, and standard mileage wins easily: $14,000 versus perhaps half that in actual costs. There's no universal answer; there's only your numbers, run both ways.
Both methods require substantiating your business miles — date, destination, business purpose, and miles for each trip, plus your odometer readings at the start and end of the year. A contemporaneous log is the single document the IRS asks for in a vehicle audit, and "I'll reconstruct it later" is how deductions die. The painless fix is a mileage-tracking app: MileIQ, Everlance, Driversnote, and similar apps auto-detect drives from your phone and let you swipe to classify business versus personal. Turn one on, classify weekly, and export the report at year-end. For the actual method, add a folder (digital is fine) for every car receipt.
The best method is worth a few hundred dollars. The log is worth the entire deduction.
Two more log habits worth the thirty seconds: note your business purpose specifically ("client meeting — Rivera project," not "meeting"), and record the year-start odometer reading every January 1 — it's the number that anchors your total-miles denominator and the one people most often can't reconstruct. If you drive two cars for the business, keep a log per vehicle; the method election is also made per vehicle, so one car can use standard mileage while the other uses actual.
Track every mile, start new cars on the standard mileage rate unless year-one depreciation clearly wins, and run the two-method comparison each year — the answer can flip as the car ages and repairs mount. High-mileage cheap car: standard. Expensive car, high business percentage: actual. Taxagon's bookkeeping team categorizes vehicle expenses and runs this comparison for self-employed clients every season — if you'd rather not navigate it alone, reach out.
This article is general information, not tax advice for your specific situation. Tax law changes; figures are for the years stated.
Talk it through with a licensed US tax professional — we'll tell you honestly whether it applies to your situation.
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