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What is the car mileage tax deduction?

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What is the car mileage tax deduction?

Having a car as a self-employed individual can be one of your biggest assets during tax season. There are many car mileage tax deductions you can take advantage of whether you’re a freelancer, independent contractor or gig worker. If you use your car for your business, it can be one of the largest deductions you can take when you’re filing your taxes. Uber drivers can write off picking up passengers, driving to business meetings and delivering packages to lower their tax bill. You can claim this tax write off with the standard mileage deduction or the actual expenses deduction, but this will depend on how much time you are willing to put into tracking your expenses and recording your mileage, and how much you drive for work.
Key takeaways:
  • Car mileage can be a big tax deduction for self-employed individuals.
  • You can claim this deduction with the standard mileage method or the actual expenses method.

Table of contents

Who can claim the tax deduction for mileage?...Read more

How to calculate the car mileage tax deduction?...Read more

How can I claim car mileage on my taxes in 2023?...Read more

Who can claim the tax deduction for mileage?

Any self-employed individual can claim the car mileage tax deduction if they use their car for business purposes. The IRS only allows certain mileage deductions to be written off. For example, a Lyft driver can write off the miles driven from one passenger drop-off to another. However, the drive from your home to your place of work and the final drive back to your home are not tax deductible as they are “commuting miles”. So, any mileage driven from your home to a workplace cannot be written off. This car mileage tax deduction is not limited to rideshare or even delivery drivers alone. Even if you are a small business owner, influencer or freelance photographer, you can claim this deduction anytime you rack up business mileage.
Image with text "What Counts As Business Mileage?" listing examples of tax-deductible and non-tax-deductible mileage for self-employed individuals, including Doordash drivers, freelance event planners, and influencers. No mention of 1099 or taxes.
A self-employment income tax calculator can be a handy tool to calculate your total tax liability. This is a good way to get ahead of your tax planning and make a list of all the expenses that you should be tracking year round. If you need to make tax payments every quarter, use a quarterly tax calculator to make it easier. The IRS expects self-employed individuals to make these tax payments if they owe over $1,000 in tax in a calendar year. If you’ve never heard of quarterly tax payments before, don’t worry. Use a tax penalty calculator to check whether you owe the IRS any money before they decide to come knocking at your door.

How to calculate the car mileage tax deduction?

As we mentioned earlier, there are two ways to claim the car mileage tax deduction – the standard method or the actual expenses method. In 2022, the rate was set at 58.5 cents per mile from January 1 to June 30. Then, because of rising inflation, the IRS increased the rate to 62.5 cents per mile from July 1 to December 31. The standard mileage deduction for 2023 is 65.5 cents per mile for the whole year. To calculate the standard mileage deduction, you just have to multiply the total number of business miles you have driven by the standard deduction rate. This is the easiest option for taxpayers who don't use their car a lot for work, as you don’t have to keep track of too many other car-related expenses. You just have to track your miles. There are several apps (some of them are free) that you can use to do this.
Image displaying standard mileage deduction rates for 2022 and 2023. Rates vary from 58.5 to 65.5 cents/mile. Relevant for self-employed, 1099, freelancer, and taxes.
You can opt for the actual expenses method if you rely on your car a lot for your work. But this method requires you to keep track of every single car-related expense including car washes, gas and even insurance. You can also deduct lease payments if you lease your car. If you do end up using a paid mileage tracker app, you can write it off as a tax deduction, too. To calculate this, you’ll need to figure out the business percentage of your car use and then multiply that by your total car expenses for that year. So, if you use your car 20% of the time for work, just multiply your total expenses by 20%. You can use a car & mileage tax calculator to do this.
Image explaining Standard Mileage Deduction vs Actual Expenses Deduction for tax purposes. Minimal calculation and expense tracking needed for Standard Mileage method. Actual Expenses method requires intensive tracking but allows for more deductions. Can still claim parking, toll, car maintenance and registration fees. Cannot switch once chosen.
Another thing to note is that if you’re trying to claim tax deductions on a leased car, you’ll need to stick with whatever type of deduction you chose in the first year. If tracking all those car expenses seems extremely time consuming, try using FlyFin. Just link your expenses, and let A.I. find every possible deduction year-round, so you're ready when tax season comes. Expert CPAs provide unlimited 1099 tax support, including preparing and filing your returns for you on the app.

How can I claim car mileage on my taxes in 2023?

You will report your car mileage tax deductions on Schedule C, along with the other tax deductions you’re claiming. You should file this form alongside the standard Form 1040. If you want to make the most out of claiming gas on your taxes in 2023, you’ll need to choose the deduction that makes the most sense for your business. If you drive a lot or have an expensive vehicle, taking the actual expenses method will be more useful in getting you a bigger tax break. Otherwise, you can’t go wrong with a standard mileage deduction.

Depreciation Tax Deduction

The depreciation tax deduction can be claimed for any asset that is used for business. There are three methods to calculate this deduction.

Education Expenses Tax Deductible

Education expenses are tax-deductible for self-employed individuals as long as they are related to their current job. Report the deductions on Schedule C.

Internet Bill Tax Deduction

For many who work from home, the internet is necessary for doing business. For some people, their internet bill counts as a tax write-off.

Write Off Your Car Payments

There are many tax deductions you can take related to your car, if you use it for work, but unfortunately your car loan payment isn't one of them.

Home Office Deduction

How the home office deduction saves self-employed individuals and freelancers on their taxes.

Home Improvement Deduction

What qualifies as a home improvement tax deduction and how homeowners who are self-employed or freelancers can benefit most.

Travel Expense Deduction

If you travel for work as a freelancer, there are a number of travel expenses you can claim as tax deductions in 2023 – find the details here.

Food and Entertainment Deduction

For 2023, you can deduct 50% of the cost of business meals as tax deductible – but not every meal can be deducted. This is relevant to self-employed people.

Car depreciation tax

Here's how to take advantage of depreciation, one of the biggest tax deductions people who use their car for work can take.

Car tax write off

Many freelancers drive their own vehicle for business and may qualify for certain car and mileage tax deductions.

Moving expenses deduction

Until recently, you could deduct moving expenses on your tax return. Recent changes to the tax rules have impacted whether you can deduct moving expenses.

Simplified home office deduction

If you use space in your home as an office for your business, you can take either the actual home office deduction or the simplified home office deduction.

Rent Tax Deduction

If you're self-employed, there are few ways you can write off your rent, and if you know how to use them, they can be among the most important ways to save money on taxes each year.

Side Hustle Taxes

Self-employed individuals can write off business expenses when filing side hustle taxes. You can avoid paying taxes on side jobs if your net income is under $400 in a year.

Cell Phone Tax Deduction

A cell phone tax deduction is available to self-employed individuals if it is used for their business. They can also write off their internet usage.

Business And Consultant Tax Deduction

Consultant tax write-offs are useful in lowering self-employment taxes. Sole proprietors can use a QBID to lower taxable income, as they are a pass-through business entity.

Is Credit Card Interest Tax Deductible?

Credit card interest is tax-deductible if it is from a business-related purchase. You can write off a portion of the interest even on a personal credit card if it comes from a business expense.

Are Office Expenses Deductible?

The home office tax deduction is used to write off your home office and office-related expenses. Claim it using the standard or simplified method.

Advertising And Marketing Expenses Deduction

Marketing tax deductions related to promoting a business can be claimed by self-employed individuals. Report them on Schedule C.

Business Startup Costs and Deductions

Business startup costs can be amortized over 15 years. You can also deduct up to $5,000 in the first year if total costs are below $50,000.

Vehicle Write Off For Business

Vehicles used for business can be a tax write-off in 2023. You can claim this deduction even if you lease your vehicle under the actual expenses method.

Are Subscriptions Tax Deductible?

Subscriptions are tax deductible for self-employed individuals. You can write off the business use percentage as a tax deduction on Schedule C.

Depreciation Tax Deduction

The depreciation tax deduction can be claimed for any asset that is used for business. There are three methods to calculate this deduction.

Education Expenses Tax Deductible

Education expenses are tax-deductible for self-employed individuals as long as they are related to their current job. Report the deductions on Schedule C.

Internet Bill Tax Deduction

For many who work from home, the internet is necessary for doing business. For some people, their internet bill counts as a tax write-off.

Write Off Your Car Payments

There are many tax deductions you can take related to your car, if you use it for work, but unfortunately your car loan payment isn't one of them.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. It offers a host of cutting-edge tax tools that help you quickly find deductions. You can also use tools like a home office deduction calculator. FlyFin uses an A.I. to track all your business expenses automatically and find every possible tax deduction. Once you have all your possible deductions in one place, our CPA team files a guaranteed 100% accurate tax return for you. It saves you a couple of thousand dollars and a ton of time on your taxes. Download the app and have your taxes filed in minutes, saving time and more money on your taxes than last year, guaranteed.
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