The IRS gives you two ways to deduct vehicle expenses. The standard mileage rate lets you multiply your total business miles by a set rate (67 cents per mile for 2024). The actual expense method lets you deduct gas, insurance, maintenance, repairs, registration, depreciation, and loan interest based on the percentage of miles driven for business. You generally choose one method in the first year you use the vehicle for business, and there are rules about switching later. Both methods require you to track your mileage accurately.

The easiest way to track mileage is with an app. MileIQ, Everlance, and TripLog all run in the background on your phone and automatically detect trips. At the end of each day, you swipe to classify trips as business or personal. This takes about 30 seconds and gives you a reliable log with dates, starting points, destinations, and distances. If you prefer not to use an app, a simple written log works too, but you need the date, destination, business purpose, and miles for every trip. A spiral notebook in your console is better than nothing, but apps are more consistent and harder to lose.

Not every trip in your vehicle counts as a business mile. Driving from your home to a regular office or work location is commuting, and commuting is not deductible. But driving from your office to a client site, from one job to another, to the bank, to pick up supplies, or to a business meeting all count. If you work from a home office that qualifies as your principal place of business, trips from home to client locations or job sites are business miles.

If you go the actual expense route, keep every receipt related to the vehicle. Gas, oil changes, tire replacements, car washes, insurance premiums, parking fees, tolls. You also need to know your total miles driven for the year and what percentage were for business. If you drove 20,000 miles total and 14,000 were business, 70% of your actual vehicle costs are deductible. This method usually benefits people who drive an expensive vehicle or have high maintenance costs, but it requires significantly more documentation.

Whichever method you choose, the key is logging trips daily. Trying to reconstruct a year of driving from memory at tax time doesn’t work. The IRS expects contemporaneous records, meaning you documented the trip around the time it happened. A spreadsheet created in March for the previous year won’t hold up well in an audit.

Parking and tolls are deductible on top of either method as long as they’re for business purposes. Keep those receipts or use an electronic toll account that generates statements you can reference.

Once you have good mileage data, it needs to flow into your books correctly. Your QuickBooks ProAdvisor in Long Beach or bookkeeper should be recording vehicle expenses in a way that makes tax preparation straightforward. That means using the right accounts in your chart of accounts and keeping personal vehicle use clearly separated from business use.

For business owners who drive regularly for work, vehicle expenses can be one of the largest deductions available. Contractors, service providers, real estate professionals, and anyone with client visits or job sites should treat mileage tracking as a daily habit rather than an end-of-year project. Accurate tracking through full-service bookkeeping ensures those deductions actually show up on your return instead of getting lost because nobody recorded them properly.

Pick a tracking method, start using it today, and stick with it. The system that works is the one you’ll actually use every day.