Mileage, Travel, and Car Deductions
The Documentation Rules That Save (or Sink) Small Businesses
If you run a small business, vehicle and travel expenses are common—and commonly mishandled. The good news: this is one of the easiest areas to improve with a simple system.
Two ways to deduct business vehicle use
In general, you can deduct business vehicle costs using either:
The standard mileage rate, or
actual expenses (gas, repairs, depreciation, etc.). (IRS, 2025d)
Many owners choose mileage because it’s simpler—if they track it correctly.
2025 standard mileage rates (know the number)
For 2025, the IRS lists standard mileage rates, including:
70 cents per mile for business use,
14 cents for charitable, and
21 cents for medical (and certain moving expenses for military). (IRS, 2025e; IRS, 2024a)
That one number, 70 cents, can be meaningful over a year. But the IRS expects substantiation, and mileage without records is where deductions go to die.
What “good records” actually mean
The IRS focuses on contemporaneous documentation. Practically, that means:
date
destination
business purpose
miles driven (or odometer start/end)
Publication 463 is the core plain-English guidance for travel, gift, and car expenses, including recordkeeping expectations. (IRS, 2024b)
Travel and meals: don’t mix “business” with “I was there.”
Travel deductions are often legitimate, but they require that the trip be primarily business and properly documented. If you extend a trip for personal reasons, the documentation should clearly separate:
business days vs. personal days
Business meals vs. personal meals
work-related expenses vs. family costs
When records are vague, deductions become vulnerable—even if the expense was real.
A simple tracking system that works
You do not need a complicated app (though apps can help). A workable system is:
Use a mileage tracker or spreadsheet weekly (not annually).
Keep receipts in a single folder (cloud + backup).
Add a one-sentence business purpose note for travel.
Reconcile monthly so nothing piles up.
Why this matters for tax planning (not just compliance)
Clean mileage and travel tracking improve:
estimated tax accuracy
cash flow forecasting
profitability analysis by client/project
audit defensibility
And it reduces the stress of “tax time archaeology.”
References
Internal Revenue Service. (2024a). Notice 2025-5: Standard mileage rates for 2025 (Notice 2025-5). https://www.irs.gov/pub/irs-drop/n-25-05.pdf IRS
Internal Revenue Service. (2024b). Publication 463: Travel, gift, and car expenses (2024). https://www.irs.gov/publications/p463 IRS+1
Internal Revenue Service. (2025d, September 24). Topic no. 510, Business use of car. https://www.irs.gov/taxtopics/tc510 IRS
Internal Revenue Service. (2025e). Standard mileage rates. https://www.irs.gov/tax-professionals/standard-mileage-rates IRS
