Standard mileage rate vs actual expenses

Should I use the standard mileage rate or actual car expenses?

The IRS gives self-employed people two ways to deduct business use of a car: the standard mileage rate (business miles × 72.5¢ per mile for January to June 2026 and 76¢ per mile for July to December) or actual expenses (gas, oil, repairs, tires, insurance, registration fees, licenses and depreciation (or lease payments)) times the business share of your miles. IRS Topic 510 says that if you qualify for both, you may want to figure it both ways before choosing and use the larger one, within its rules: for a car you own you must choose the standard rate in year one to keep the option later; for a leased car the standard rate, once chosen, applies for the entire lease period, including renewals; and it isn't allowed for 5 or more cars at once (IRS Topic 510).

Formula: standard = business miles × IRS rate for the dates driven; actual = total car costs × (business miles ÷ total miles). Parking and tolls go on top of either.

Worked example: 6,000 business miles in 2026 (3,000 before July 1, 3,000 after) = $2,175.00 + $2,280.00 = $4,455.00 standard, versus $7,000 of car costs × 40% business use = $2,800.00 actual.

Last verified November 2, 2026 against IRS Topic no. 510, Business use of car, IRS: Standard mileage rates, IRS Publication 463, Travel, Gift, and Car Expenses (chapter 5, Recordkeeping). Fee change tracker · How we verify

Side by side

Item	Standard mileage rate	Actual expenses
What you add up	Business miles only	Every car cost for the year, plus total miles
2026 rate or share	72.5¢ per mile (Jan 1-Jun 30), 76¢ per mile (Jul 1-Dec 31)	Business miles ÷ total miles
Costs included	The rate covers the cost of operating the car	gas, oil, repairs, tires, insurance, registration fees, licenses and depreciation (or lease payments)
Parking and tolls for business	Deductible separately	Deductible separately
Records	Mileage log	Mileage log plus every receipt
Owned car	Must be chosen in the first year the car is available for business; later years can switch	Can be used in any year, but using it in year one rules out the standard rate later
Leased car	If chosen, used for the entire lease period, including renewals	If you claimed actual expenses on a leased car, the standard rate isn't allowed
Where it goes (self-employed)	Schedule C (Form 1040), Profit or Loss From Business (Schedule F for farmers)

Source: IRS Topic 510, Business use of car and the IRS standard mileage rates page.

When you can't use the standard rate

IRS Topic 510 says you must own or lease the car and must not:

operate 5 or more cars at once (a fleet operation);
have claimed depreciation on the car using any method other than straight-line, or used MACRS;
have claimed a Section 179 deduction or the special depreciation allowance on the car;
have claimed actual expenses for a car you lease.

Switching methods later

For a car you own, choosing the standard rate in the first year keeps both doors open: Topic 510 says that in later years you can choose the standard rate or actual expenses. If you switch to actual expenses before the car is fully depreciated, the IRS says you must use straight-line depreciation over the car's remaining useful life. Going the other way is limited: if you used actual expenses with accelerated depreciation, the standard rate is off the table for that car. Because of these rules, the first year you use a car for business is the decision that matters most; it is worth asking a tax professional before you file that year.

Worked example (illustration)

Line	Standard mileage	Actual expenses
Business miles	3,000 (Jan-Jun) + 3,000 (Jul-Dec)	6,000 of 15,000 total = 40%
Working	3,000 × 72.5¢ per mile + 3,000 × 76¢ per mile	$7,000 car costs × 40%
Deduction before parking/tolls	$4,455.00	$2,800.00

Illustration only. The $7,000 of yearly car costs (gas, insurance, repairs, registration and depreciation) is a made-up figure, not an average; use your own receipts. Depreciation limits apply to the actual method (see IRS Topic 704 and Publication 463). In this example the standard rate is larger; a car with high costs and a high business share can come out the other way.

Either way, the mileage log is what proves the business miles and the business-use share. Start with the free mileage log template, check the record rules in what a mileage log needs for the IRS, and run your miles through the 2026 mileage deduction calculator, which applies 72.5¢ and 76¢ by date.

Questions

Is the standard mileage rate or actual expenses better?

Neither is better in general. IRS Topic 510 suggests that if you qualify for both, you figure the deduction both ways before choosing. The standard rate is simpler; actual expenses can be larger for a car with high running costs and heavy business use.

What is the 2026 standard mileage rate?

72.5¢ per mile for business miles driven January 1 to June 30, 2026 and 76¢ per mile from July 1 to December 31, 2026, per the IRS standard mileage rates page.

Can I switch from actual expenses to the standard mileage rate?

For a car you own, only if you chose the standard rate in the first year the car was available for business and haven't used accelerated depreciation, Section 179 or bonus depreciation on it. For a leased car, if you claimed actual expenses you can't use the standard rate. Check IRS Topic 510 or ask a tax professional.

Can I switch from the standard mileage rate to actual expenses?

Yes, for a car you own, in a later year. IRS Topic 510 says you then use straight-line depreciation over the car's remaining useful life if the car isn't fully depreciated.

Can I deduct gas if I use the standard mileage rate?

No. Gas, oil, repairs, insurance and depreciation are part of the actual expense method. Under the standard rate you deduct business miles times the rate, plus business parking and tolls, which IRS Topic 510 says are deductible separately under either method.

What records do I need for each method?

Both need a mileage log with business miles. The actual method also needs total miles for the year (to work out the business share) and receipts for every car cost. See our mileage log requirements guide for the IRS list.

General information, not tax, legal or accounting advice. Rates change: check the linked official source before you rely on a number. Not yet reviewed by a CPA or EA.