Standard Mileage Rate or Actual Car Expenses? How Self-Employed Drivers Should Choose

Every self-employed person who drives for work faces the same question: deduct the standard mileage rate, or add up every gas receipt, repair bill, and insurance payment and deduct the business share of the actual costs?

Most people pick whatever their tax software suggests the first year and never think about it again. That is a mistake, because the first-year choice can lock in what you are allowed to do later.

The two methods

Rev. Proc. 2019-46 is the IRS guidance that governs the standard mileage rate. Section 4.01 says you may deduct either the business standard mileage rate times your business miles, or the actual fixed and variable costs allocable to those business miles.

Standard mileage rate

You multiply business miles by the rate for the period you drove them:

Miles driven	Business rate	Portion treated as depreciation
2025	70 cents	33 cents
January 1 to June 30, 2026	72.5 cents	35 cents
July 1 to December 31, 2026	76 cents	35 cents

The 2025 rate comes from the 2025 Schedule C instructions. The 2026 rates come from Notice 2026-10, which set 72.5 cents, and Announcement 2026-11, which raised the business rate to 76 cents for miles driven on or after July 1, 2026, because of fuel price increases. The depreciation figures come from section 4 of Notice 2026-10.

Under section 4.02 of Rev. Proc. 2019-46, the rate is in lieu of your actual costs for depreciation or lease payments, maintenance and repairs, tires, gas, oil, insurance, and license and registration fees. Under section 4.03, you can still deduct business parking fees and tolls separately, and the business portion of car loan interest and state and local personal property taxes to the extent IRC Sections 163 and 164 allow.

Actual expenses

You total the year's operating costs (gas, oil, repairs, tires, insurance, registration, lease payments or depreciation, and so on), then multiply by your business-use percentage: business miles divided by total miles. If you drove 20,000 miles and 14,000 were business, you deduct 70% of the actual costs.

Depreciation under the actual method is subject to the limits for passenger automobiles in IRC Section 280F. Those limits change by year and by the depreciation method used, and they are worth reviewing with a preparer before you buy a car on the theory that it will be a big write-off.

The first-year choice that locks you in

Section 4.05(3) of Rev. Proc. 2019-46 is the rule most people never read. You cannot use the standard mileage rate for a car if you have claimed:

• Depreciation using any method other than straight-line over its estimated useful life,
• A Section 179 deduction,
• Bonus, or additional first-year, depreciation, or
• Depreciation under ACRS or MACRS.

The same section says that by using the standard rate, you have elected to exclude an owned car from MACRS. And if you later switch from the standard rate to actual costs, you must use straight-line depreciation for the car's remaining estimated useful life, subject to the Section 280F limits.

In practice:

• Start with the standard rate: you can switch to actual expenses in a later year, but only with straight-line depreciation.
• Start with actual expenses and accelerated depreciation: you generally cannot switch to the standard rate for that car.

The year you put a car into service is the year you decide what kind of deduction it can produce. Decide on purpose.

Leased cars

Section 4.05(2) of Rev. Proc. 2019-46 says you cannot use the standard rate for a leased car unless you use it, or a FAVR allowance, for the entire lease period. Pick the method at the start of the lease and stay with it.

Fleets

Section 4.05(1) bars the standard rate for five or more cars you own or lease and use at the same time, as in fleet operations. Most gig workers never hit this, but a family delivery operation with several vehicles can.

How to compare the two methods

There is no universal winner. The standard rate tends to look good when you drive a lot of miles in a car that is cheap to own and run. Actual expenses tend to look good when the car is expensive, the business-use percentage is high, and the operating costs are large. The only way to know is to run both for your facts in the first year.

When you compare, remember three things:

1. Depreciation reduces basis either way. Under section 4.04 of Rev. Proc. 2019-46, when you use the standard rate, a per-mile amount is treated as depreciation and reduces your basis in the car. That matters when you sell or trade it in.
2. Actual expenses need more paper. Every receipt, plus the mileage log to support the business percentage.
3. The rate can move mid-year. As 2026 showed, a mid-year rate change means dated mileage records are not optional.

Records are required either way

A car is listed property under IRC Section 280F(d)(4), and IRC Section 274(d) denies a deduction for listed property unless you substantiate it with adequate records or sufficient evidence corroborating your own statement. Treas. Reg. 1.274-5T(b)(6) says the elements to prove are the amount of each business use (mileage for cars) and total use, the date, and the business purpose.

The standard rate does not let you skip the mileage log. It just lets you skip the gas receipts. For what the log must contain, see mileage log requirements.

Where it goes on the return

The 2025 Schedule C instructions say you complete Schedule C, Part IV, if you claim the standard mileage rate and are not otherwise required to file Form 4562, and you complete Form 4562, Part V, if you claim depreciation on the vehicle. Those sections ask about total miles, business miles, commuting miles, and whether you have written evidence. Answer them honestly. "No" to written evidence is an invitation.

For driver-specific issues, see our guides for rideshare drivers and delivery drivers. For what happens when an examiner tests the numbers, see what the IRS examines in a Schedule C audit.