The Mileage Deduction: Standard Rate vs Actual Expense Method

Of all the deductions a freelancer can take, mileage is the easiest and one of the most under-claimed. Drive 8,000 business miles in a year and you have $5,600 of deduction at the 2025 standard rate, no receipts to file. The IRS gives you two methods to choose from, but the standard method works for most freelancers; the actual-expense method only wins in specific situations. Here is how to pick, what counts as "business" miles, and the log the IRS expects you to keep.

The two methods, in one table

Standard mileage rate. Multiply business miles by an annual IRS-published rate. 70¢ per mile for 2025 (the IRS publishes the new rate every December). No tracking of gas, oil, repairs, depreciation. The single number covers everything except parking, tolls and interest on a car loan, which you can deduct separately.

Actual expense method. Track every cost of operating the vehicle and deduct the business-use percentage. That includes gas, oil, tires, repairs, insurance, registration fees, lease payments OR depreciation. More paperwork, often a bigger deduction for vehicles that are expensive to run.

The lock-in rule (very important)

The IRS lets you switch BETWEEN the methods year to year — but only if you used the standard method in the FIRST year you placed the vehicle in service. If you start with actual-expense in year one, you are locked into actual-expense for the life of that vehicle.

Practical implication: if you bought a car this year and might want to optimize later, take the standard mileage rate this year, even if actual-expense would produce a slightly bigger number. That preserves your option to switch.

What counts as a business mile

The IRS-recognized categories:

Travel from your office to a client meeting and back.
Travel between two client sites.
Travel from home to a temporary work location (like a one-off conference or job site).
Travel for business errands: post office, supply runs, the bank for a deposit.
Rideshare miles between dropoffs (the "P3 miles" in Uber's lingo) and miles driven while waiting for a fare.

What does NOT count:

Commuting from home to your regular place of business. Commute is never deductible, even for the self-employed.
Personal trips, even if you happen to think about work.
Mixing in a coffee shop stop on a personal errand.

The home-office workaround: if your home IS your principal place of business (the test for the home office deduction), then any drive from home to a client or temporary site counts as business — there is no commute because the office is the home.

The mileage log the IRS expects

The single most common reason mileage deductions get reduced or denied at audit: no contemporaneous log. The IRS does not require a fancy app, but they do require records that:

Were kept around the time of the trip (not reconstructed in April).
Show the date, destination, business purpose, and miles for each business trip.
Tie out to total odometer readings (start of year, end of year).

Acceptable formats: a notebook in your glove box, a spreadsheet you update weekly, a notes-app entry per trip, or a dedicated app (MileIQ, Stride, Hurdlr, QuickBooks SE's built-in tracker). The app-based logs survive audits well because they timestamp themselves automatically.

Reconstructing a year of mileage from memory in April never holds up. The IRS will allow some reconstruction (e.g., Google Maps round-trips to known clients supported by calendar entries), but anything beyond that is risky.

A worked example: standard vs actual

Maria drives 12,000 miles total in 2025. 8,000 were for business. She bought the car new in 2023 for $32,000. Her annual operating costs:

Gas: $2,400
Insurance: $1,800
Maintenance and repairs: $900
Registration and inspection: $250
Depreciation under MACRS (third year on a $32k car): roughly $5,800
Total operating cost: $11,150

Business-use percentage: 8,000 / 12,000 = 66.67%.

Standard mileage: 8,000 × $0.70 = $5,600.

Actual expense: $11,150 × 66.67% = $7,433.

Actual-expense wins by $1,833 in this case — but only because depreciation is still meaningful at year three. By year six, depreciation drops sharply and the standard method usually overtakes actual-expense.

If Maria leases instead of owns, the lease payment ($400/mo × 12 = $4,800) replaces the depreciation line, and the math shifts year to year.

When standard wins

Older paid-off cars (no depreciation left, low operating cost).
Fuel-efficient vehicles where gas is a small line.
Drivers who simply want zero paperwork.
Year-one situations where preserving switching ability matters.

When actual-expense wins

New or expensive vehicles in their first 5 years (depreciation is large).
Vehicles with high repair costs or low MPG (large operating expense).
Heavy business use percentage (above 70%).
Lease vehicles where the lease payment is high.

What you can deduct on top of either method

Three line items are deductible separately regardless of which method you pick:

Business parking fees (e.g., parking at a client's office).
Tolls during business trips.
Interest on a car loan, prorated to business-use percentage.

Common mistakes

Counting commuting miles. Daily drives between home and your usual workplace are not deductible. Period.
Using the standard rate AND deducting gas/insurance separately. The standard rate already includes those.
Reconstructing mileage from memory at tax time. Keep a running log.
Switching to actual-expense after starting with standard, but for an older car already past its depreciation peak. Standard is usually higher at that point.
Treating a coffee-and-laptop run to Starbucks as a business mile. The drive itself has to have a business purpose at the destination.
Forgetting to report the percentage on Schedule C Part IV when claiming line 9.

Industry-specific notes

Rideshare drivers (Uber, Lyft, DoorDash). The platforms report only paid trip miles. The IRS allows you to deduct ALL miles between trip acceptance and dropoff, plus reasonable miles spent waiting for a fare in the area you typically work. That is usually 1.3-1.6× the platform-reported miles. See the rideshare taxes guide for details.

Real-estate agents and salespeople. Driving between the office, listings, and showings counts. Round-trip miles to a closing or a client meeting count.

Service freelancers (designers, writers, developers). Mostly client meetings, occasional supply runs, conferences. Tend to have lower business mileage but every trip still counts.

Photographers and videographers. Travel to and from shoots, location scouts, equipment pickups. Often substantial mileage.

Sources and methodology

Rules referenced come from IRS Pub 463 (Travel, Gift, and Car Expenses), the annual standard mileage rate notices, and Schedule C Part IV instructions. The 70¢ rate cited is from IRS Notice 2025-02 for tax year 2025. The 2026 rate is announced each December; verify before filing your 2026 return. Federal works are public domain (17 U.S.C. § 105).

Disclaimer: Vehicle deductions have edge cases for fleet owners, depreciation recapture on disposal, Section 179 limits on heavier-than-6,000-lb vehicles (the "G-Wagen loophole"), and special treatment for trucks and SUVs. Consult a CPA if your situation is non-standard.