Standard Mileage vs. Actual Expenses: Which Method Saves Self-Employed Drivers More in 2026?

Two methods, one choice

Standard mileage: multiply your business miles by the IRS rate (72.5¢ Jan–Jun 2026, 76¢ Jul–Dec 2026). Done.

Actual expenses: total everything you spent on the car — gas, insurance, repairs, tires, registration, lease payments or depreciation — then deduct the business-use percentage.

When standard mileage usually wins

• You drive a lot of business miles in a fuel-efficient or older, paid-off car
• You want the simplest possible record-keeping
• Your vehicle costs per mile are below the IRS rate

When actual expenses can win

• Expensive vehicle, high depreciation, or a lease
• Lower total mileage but high fixed costs
• Very high business-use percentage (80%+)

The catch everyone misses

You still need a mileage log under the actual expense method. The business-use percentage is business miles ÷ total miles. No log, no percentage, no deduction.

Rules to know

• If you want the option of standard mileage on a car, you generally must choose it in the first year you use that car for business.
• You cannot switch to standard mileage after claiming accelerated depreciation on the same vehicle.
• Parking and tolls for business trips are deductible on top of either method.

Worked example

A real estate agent drives 15,000 business miles out of 20,000 total in 2026 (75% business use).

• Standard mileage (assume 7,500 / 7,500 split): 7,500 × 0.725 + 7,500 × 0.76 = $11,137.50
• Actual expenses: $14,000 in total car costs × 75% = $10,500

Standard wins here — but flip the car to a new $60,000 SUV with heavy depreciation and actual expenses can pull ahead.

Bottom line

Run both numbers in year one. Whichever method you pick, the mileage log is the foundation. That is what MileVault is for.

Educational content only. Not tax advice — consult a tax professional.