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
- 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
- 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
- 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:
o Depreciation – limitations and adjustments may apply
Businesses can see Publication 463, Travel, Gift and Car Expenses, for a full list of actual expenses and how to calculate them.
IRS issues standard mileage rates for 2019
IRS Notice 2019-02
National Small Business Week
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