Standard mileage or actual expenses: how a gig driver chooses a vehicle method
There are two ways to deduct the business use of your car. The standard mileage method values every business mile at the IRS rate and stands in for the car's running costs. The actual expense method deducts the business share of what the car really cost you. You cannot take both for the same car in the same year, and the first choice you make can limit later ones.
The standard mileage method
Multiply your eligible business miles by the standard mileage rate for the period they were driven. For 2026 that is 72.5 cents a mile through June 30 and 76 cents a mile from July 1. The rate replaces separately deducting that vehicle's operating costs: gas, oil, insurance, maintenance and repairs, tyres, depreciation or lease payments, and licence and registration.
Business parking and tolls are deducted on top of the rate. So, for a self-employed driver, can the business share of the interest on a car loan. Everything else about running the car is inside the cents-per-mile figure.
The method needs one record: a mileage log with the date, the destination or route, the business purpose and the miles. It does not need receipts for gas or repairs.
The actual expense method
Add up what the car cost for the year, including gas, oil, repairs, tyres, insurance, registration, lease payments or depreciation, and take the business-use percentage of the total. The percentage is business miles divided by total miles for the year, so the mileage log is still required. The receipts for every cost are required as well.
The method rewards an expensive car with heavy business use and punishes a cheap, efficient one. A driver in a paid-off compact with low running costs will usually find the standard rate values their miles more generously than their receipts do.
The first year's choice matters
If you use the actual expense method in the first year you use a car for business, you generally cannot switch that car to the standard mileage rate later. Choosing the standard rate first keeps both options open in later years, with depreciation rules that apply when you switch. Leased vehicles have their own rule: a method chosen for a lease has to be kept for the whole lease term.
This is the reason a first-year decision deserves more care than the arithmetic alone suggests. The method that wins by a few dollars this year can lose in a year when the car needs a transmission.
Which one usually wins for gig drivers
High business miles in a modest car favour the standard rate. Low miles in an expensive or newly bought car can favour actual expenses. The only honest answer is to work both figures from your own log and receipts, which is what the example below does with round numbers.
Whatever you choose, the deduction reduces business profit. It is not a refund and not a dollar-for-dollar reduction in tax; what it is worth depends on the rest of your return.
How RoadKept handles it
RoadKept records the method per vehicle and keeps it for as long as you own the car. It computes the standard figure from your dated log at the right rate for each date, computes the actual figure from the costs you record, and shows both so the comparison is in front of you before the year closes. If a car is on the standard method, a fuel or repair receipt for it is declined from the deduction rather than double-counted.
One car, both methods, round numbers
A driver logs 9,000 business miles in 2026 — 4,000 before July 1 and 5,000 after — in a car that is 70% business use, with $7,500.00 of costs for the year: $2,400.00 gas, $1,500.00 insurance, $600.00 repairs and $3,000.00 depreciation.
| Standard: 4,000 miles at 72.5¢ + 5,000 miles at 76¢ | $6,700.00 |
|---|---|
| Actual: $7,500.00 of costs × 70% business use | $5,250.00 |
|
Standard mileage is ahead by For this car and this year. A costlier car or a repair-heavy year moves the answer. |
$1,450.00 |
Parking, tolls and the business share of loan interest are deductible under either method and are not in these figures. Both methods reduce profit; neither is money back.
Work it out from your own log — free
No card. Log a week and RoadKept shows the figure for your miles, at the right rate for each date.
Work it through with your own figures
The Mileage Deduction Calculator takes the numbers from your own log and does this arithmetic for you, free and without an account.
Questions drivers ask
Does the standard mileage rate cover my gas and repairs?
Yes. The standard mileage method replaces separately deducting that vehicle's operating costs — gas, oil, insurance, maintenance and repairs, tyres, depreciation or lease costs, and licence and registration. Do not deduct those as well for the same vehicle and year. Business parking and tolls can be deducted separately, and a self-employed driver may also be able to separately deduct the business-use share of vehicle-loan interest and certain personal-property taxes. Eligibility and election rules can limit whether you may use the standard mileage method at all.
Is the deduction the same as money back?
No. A mileage deduction reduces your business profit — it is not a credit and not a refund. What it is actually worth depends on your whole return: it may reduce self-employment tax, federal income tax and state tax, but the Social Security wage base, any W-2 wages, the deductible half of self-employment tax, the QBI deduction, your standard or itemised deduction, credits, filing status, other income and your state's rules all change the result. Treat any “tax saved” figure here as an estimate under the assumptions this page states, not as the deduction multiplied by a stack of rates.