IRS Tax Tip 2019-57, May 10, 2019
Businesses that use a car or other vehicle may be able to deduct the expense of operating that vehicle on their taxes. Businesses generally can use one of the two methods to figure their deductible vehicle expenses:
- Standard mileage rate
- Actual car expenses
For 2019, here are the standard mileage rates for calculating the deductible costs of operating an automobile for business, charitable, medical or moving purposes:
- 58 cents per mile driven for business use
- 20 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
Of course, business taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Here are some facts to help business owners understand the differences between the two methods of figuring their deductible vehicle expenses:
- Businesses that want to use the standard mileage rate for a car they own must choose to use the standard mileage rate in the first year they use the vehicle. Then, in later years, they can choose to use either the standard mileage rate or actual expenses.
- If a business wants to use the standard mileage rate for a car they lease, they must use this rate for the entire lease period.
- The business must make the choice to use the standard mileage rate by the due date of their return, including extensions. They can’t revoke the choice.
- A business that qualifies to use both methods may want to figure their deduction both ways to see which gives them a larger deduction.
- Here are some examples of actual car expenses that a business can deduct:
- Licenses
- Gas
- Oil
- Tolls
- Insurance
- Repairs
- Depreciation – limitations and adjustments may apply
Businesses can see Publication 463, Travel, Gift and Car Expenses (PDF), for a full list of actual expenses and how to calculate them.