Hi, I’m Bette Hochberger, CPA, CGMA. If you’re a business owner or self-employed professional, using your vehicle for work can lead to significant tax savings if you know how to maximize your car write-offs. Whether you’re driving to meet clients, making deliveries, or traveling between job sites, the IRS allows you to deduct certain vehicle-related expenses. However, understanding the rules and keeping proper records are critical to making the most of these deductions. In today’s quickie, I’ll provide a step-by-step guide to help you maximize your car write-offs and reduce your taxable income.

What Are Car Write-Offs?

Car write-offs refer to deductible expenses related to the business use of your vehicle. These deductions can include the cost of gas, repairs, maintenance, insurance, depreciation, and more. There are two primary methods for calculating your car-related deductions:

  1. Standard Mileage Rate Method – A simplified method where you multiply the total business miles driven by the IRS standard mileage rate for the year.
  2. Actual Expenses Method – A more detailed method where you calculate the actual cost of using your vehicle for business purposes, including gas, insurance, repairs, and depreciation.

Both methods can save you money, but you’ll need to choose the one that offers the largest deduction based on your driving habits and record-keeping abilities.

Step 1: Determine Your Eligibility

Before claiming car write-offs, make sure you meet the IRS requirements. To qualify:

  • The Vehicle Must Be Used for Business Purposes: Personal use of the car is not deductible unless it’s a separate vehicle exclusively for business.
  • You Must Have Proper Documentation: Keeping detailed records of your vehicle’s business use is essential to justify your deductions in the event of an audit.

Step 2: Choose the Right Deduction Method

You can choose between the standard mileage rate method or the actual expenses method, but not both. Here’s how each works:

Standard Mileage Rate Method

  • For 2025, the IRS standard mileage rate is 65.5 cents per mile (subject to updates).
  • To calculate your deduction, multiply your total business miles by the mileage rate. For example, if you drove 10,000 business miles in 2025, your deduction would be $6,550.
  • Keep a mileage log that tracks the date, starting location, destination, purpose of the trip, and miles driven.

Actual Expenses Method

  • This method allows you to deduct the actual costs of operating your vehicle for business. Eligible expenses include:
      • Gas and oil
      • Insurance
      • Maintenance and repairs
      • Depreciation or lease payments
      • Registration fees
      • Interest on loans (if self-employed)
  • If your car is used for both personal and business purposes, you can only deduct the percentage of costs related to business use. For example, if 60% of your car’s use is for business, you can deduct 60% of the total expenses.

Step 3: Track Your Mileage and Expenses

Proper record-keeping is the foundation of maximizing your car write-offs. Here’s how to stay organized:

  • Use a Mileage Tracking App: Apps like MileIQ, TripLog, or Everlance make it easy to track your business miles automatically and generate reports.
  • Keep Receipts: If you use the actual expenses method, save receipts for gas, repairs, insurance, and other eligible costs.
  • Document Business Use: Note the purpose of each trip, such as visiting clients, attending meetings, or making deliveries.

Step 4: Be Aware of Special Rules

  • Commuting Miles Are Not Deductible: Driving from your home to your regular place of work is considered commuting and is not eligible for a deduction. However, driving between job sites or to client meetings is deductible.
  • Self-Employed Individuals vs. Employees: If you’re self-employed, you can claim car write-offs directly on your Schedule C (Profit or Loss from Business). However, if you’re an employee, you cannot deduct vehicle expenses unless you are reimbursed by your employer.
  • Electric Vehicles: If you own an electric vehicle (EV), you may also qualify for additional tax credits, such as the federal EV tax credit.

Step 5: Consult a Tax Professional

Choosing between the standard mileage rate and actual expenses method can be tricky, especially if you’re unsure which will yield a larger deduction. A tax professional can help you evaluate your options and ensure you’re taking full advantage of all eligible write-offs.

Maximizing your car write-offs can significantly reduce your tax burden, but it requires careful planning and record-keeping. By understanding the rules, choosing the right deduction method, and keeping detailed records, you can make the most of the deductions available to you. Whether you’re self-employed or a small business owner, every mile counts when it comes to saving on taxes.

Stay organized, stay informed, and if you’re ever in doubt, consult with a tax professional to ensure you’re optimizing your deductions while staying compliant with IRS regulations.

I hope you learned something new today. As always, stay safe, and I’ll see you next time!