LLC Mileage Rate Guide — IRS Standard Mileage vs. Actual Expense Method (2025–2026)

1. Install a mileage tracking app at the start of the year (or when you begin business use) The most important mileage step happens at the beginning of the year, not at tax time. Install MileIQ, Everlance, or TripLog and enable automatic trip detection. Record the odometer reading on January 1 (or the date you begin business use of the vehicle). For each trip the app detects, classify it as business or personal within 24 hours of completion — this is the 'contemporaneous' standard. Include the business purpose for each business trip (e.g., 'client site visit — Smith Corp Austin,' not just 'business'). The app stores each trip's date, GPS path, mileage, and your classification — this constitutes adequate records for the IRS. Without a tracking app, maintain a paper log kept in the glove box.
2. Exclude commuting miles — identify which trips are deductible Before counting any miles as business miles, apply the commuting exclusion: trips from your home to your regular place of business (if you rent or own a separate office) are commuting miles — never deductible. Deductible business miles include: trips from your regular office to client sites, supplier visits, industry events, or any other business location; trips from home to client sites or business locations if your home office qualifies as your principal place of business (see the home office deduction guide); trips to banks, post offices, or business errands; trips to business meetings, conferences, or networking events; trips to and from business-related training. If you're unsure whether a trip is a commute, review the home office deduction guide — a qualifying home office converts many 'commutes' into deductible business miles.
3. Sum business miles at year-end and compare standard vs. actual expense At year-end: sum total business miles from your mileage log. Record the December 31 odometer reading to establish total miles driven. Calculate standard mileage deduction: business miles × 2025 rate (70 cents) = deduction. Calculate business-use percentage: business miles ÷ total miles × 100%. For the actual expense method: total vehicle operating costs (fuel + insurance + registration + maintenance + repairs) × business-use percentage + depreciation (MACRS, §179, or bonus) × business-use percentage = actual expense deduction. Compare the two amounts. For most high-mileage drivers of moderately priced vehicles, standard mileage wins. For low-mileage drivers of expensive vehicles (e.g., 5,000 business miles in a $60,000 SUV), actual expenses often produce a larger deduction in year 1 due to Section 179 or bonus depreciation.
4. Elect your method and report on your business return For the first year the vehicle is placed in service: elect the standard mileage rate by reporting business miles on Schedule C, Part II, Line 9 (select 'Standard mileage' and enter miles). No Form 4562 is required for standard mileage unless you also have other depreciable property. If you elect actual expenses, complete Form 4562 for any depreciation and report the total actual vehicle expense on Schedule C, Line 9 (select 'Actual expenses' and include the total). For a multi-member LLC (Form 1065), vehicle expenses are reported on the entity return if the vehicle is owned by the LLC; if the member owns the vehicle personally, expenses are reimbursed under an accountable plan or claimed as an unreimbursed partner expense. For an S-Corp-elected LLC, vehicle expenses are reimbursed to the owner-employee under an accountable plan — the owner cannot deduct personal vehicle expenses on their personal return for an S-Corp-owned business.
5. Add parking fees, tolls, and other directly deductible costs Regardless of method (standard or actual), business-related parking fees and tolls are separately deductible at 100%. These are not included in the standard mileage rate. Report them on Schedule C, Part II, Line 9 (in addition to the mileage deduction) or on the applicable entity return line. Parking fees for commuting (parking at your regular office) are not deductible. Parking fees at client sites, business events, airports, and any location other than your regular commuting parking are fully deductible.
6. Retain mileage records for the required period Keep all mileage logs for at least 3 years from the filing date of the return on which the deduction was claimed (the standard IRS audit window). If you use the actual expense method with a multi-year depreciation schedule, retain records for the entire depreciation period plus 3 years — because disposition of the vehicle triggers gain/loss and recapture calculations that reference the original basis and accumulated depreciation. Mileage app records stored in the cloud automatically provide a time-stamped, GPS-verified record — export and save a copy each year in PDF or CSV format as a backup.

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IRC §162 (Ordinary and necessary business expenses — vehicle costs). IRC §274(d) (Listed property substantiation — contemporaneous mileage log required for vehicle deductions). Rev. Proc. 2019-46 (Standard mileage rate rules, switching method restrictions, and depreciation equivalent rates). IRS Notice 2024-100 (2025 standard mileage rates — business: 70 cents per mile; medical/moving: 21 cents; charitable: 14 cents). IRC §280A(c)(1) (Home office as principal place of business — determines whether home-departure trips are business miles or commuting). IRS Publication 463 (Travel, Gift, and Car Expenses — comprehensive vehicle deduction guidance). Rev. Proc. 2019-46, Section 4 (restrictions on using standard mileage rate).

Direct filing portal: https://www.irs.gov/forms-pubs/about-schedule-c-form-1040