Folks who use their vehicles for business or have vehicles dedicated to the business can deduct the mileage for business travel. A standard mileage deduction can be claimed on your tax return, as well as an actual expense option. Which is better? Read on to decide for yourself.

If you use a car, truck, van, or another vehicle to conduct your business, you are entitled to a deduction for the business miles you drive. Since the government is strict on mileage for business as opposed to personal use for vehicles that do double duty, keep good records of gas receipts and odometer readings.

Business mileage is restricted to travel between the business office and other residences or places of business for business reasons. You can drive to the post office from the business office to mail packages to clients. A vehicle can travel from a warehouse where products are stored to a client’s home for delivery.

Vehicles used for business and personal use must split the cost of the mileage deduction for tax purposes. If the car is used for business sixty percent of the time, sixty percent of the mileage cost can be claimed on a tax return. Keeping a mileage log in the car can eliminate confusion when determining the mileage deduction.

There are two types of mileage deductions for business: standard mileage and actual expenses. The standard mileage for this tax filing year and the future is 65.5 cents per mile for 2023. Only one mileage rate can be deducted in a particular tax year.

The best way to determine the more significant amount is to compare the two figures. For the actual car expenses, lease payments, depreciation, maintenance, repairs, insurance, and registration fees can be included in the actual expense deduction. A business with more than one vehicle, such as a limousine service or moving company, can calculate actual car expenses.

Standard mileage must be claimed the first year you use a car for your business. After the first year, you can choose either option. The standard mileage option is not allowed when five or more cars are used in your business simultaneously. If less than that number of cars are used one at a time or simultaneously, the standard mileage deduction can apply.

The standard mileage rate has limitations. It can’t be used if the vehicle in question is a taxi or is used as a mail-carrying vehicle, or you have claimed any other depreciation or deduction for the vehicle. Cars leased before the end of 1997 must use the standard mileage rate for the entire lease period.

It is okay to calculate the two amounts and then decide. Whatever decision you make for a given year is locked in, but you can switch between the two in future years that the vehicle is used for your business. Standard mileage is more straightforward, but actual expenses may net a higher deduction.