How to Calculate Mileage Deduction on Your Tax Return

Standard Mileage Discount Rate
Destination
2021 (tax return due in 2022)
2022 (SPT due 2023)
Business mileage 56 cents per mile 58.5 cents per mile Medical and mobile mileage 16 cents per mile 18 cents per mile Charity mileage 14 cents per mile 14 cents per mile

The chart above shows the standard IRS mileage rates for the fiscal years 2021 and 2022. The standard mileage rate is the amount you can deduct based on the mileage rather than the actual cost of your vehicle.

Businesses often use these rates to cover the costs of employees using their personal vehicles for work-related travel. If you are self-employed, you can use it to determine your own deductions.

How to Calculate Mileage for Tax

There are two ways to calculate your mileage for your tax return: using standard mileage rates or calculating your actual cost.

Standard mileage

Standard mileage rates are a simple way to reduce your mileage. This is based on the number of miles traveled, not your actual cost. You track your mileage for an IRS-approved purpose (business, medical activity, moving, or charity work). Then, you multiply it by the correct mileage rate.

For example, if you drive your vehicle 1,000 miles for IRS-approved business purposes in 2021, multiply 1,000 miles x $0.56 per mile. You will be able to deduct $560.

To use standard mileage rates for the car you own, you’ll need to choose this method for your first year using the car for business. You can then choose between discounts based on standard mileage fare or actual costs in subsequent years. If you choose the standard mileage rate for the vehicle you are renting, you must stick with that method for the entire lease.

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If you choose this method, you must record your miles to calculate your deduction at the end of the year. Keep a written mileage record on your vehicle, or download a mileage app to track.

Actual Cost

You can choose to reduce the actual cost of using your vehicle instead of reducing your mileage. If you use the vehicle for both business and personal reasons, you can only deduct fees for business use. You can enter the following costs:

  • Gas
  • Oil, tires and repair
  • Coverage
  • License and registration fees
  • Vehicle depreciation or rental payments due to the percentage of miles you drive for business purposes

You should keep records, such as receipts, to document your vehicle expenses. They will allow you to support your withholding if you are audited. You must keep old tax records for at least three years after you file your return.

If you qualify for both mileage methods, try calculating them both to see which results in the larger reduction.

Who Can Cut Mileage for Business?

You cannot claim business mileage deductions for your travel expenses between your home and your regular place of work. Your employer may reimburse you for some work-related travel, such as if you drive from your primary work location to meet a client.

However, you may not deduct any mileage that is not reimbursed by your employer. Under TCJA rules, itemized deductions for employee expenses not reimbursed are deferred from 2018 to 2025. The only exceptions are for:

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  • Military reserve
  • State and local employees are paid on a fee basis
  • People whose work costs are related to impairment
  • Multiple performing artists

The rules are different if you are self-employed. You still can’t reduce mileage if you travel from home to your main business, but you can if you travel from your business to meet clients or visit project sites, even if your business is based outside your home.

The tax rules for drivers sharing a ride are similar. Drivers sharing a ride can deduct mileage according to standard IRS rates or actual costs.

Who Can Cut Mileage for Moving?

You can reduce your mileage on the move only if you are an active duty military and you have been ordered to permanently change stations. Otherwise, this mileage deduction is not allowed. The TCJA suspended deductions for moving fees for all nonmilitary taxpayers from 2018 to 2025.

Who Can Deduct Mileage for Medical Reasons?

You may take a medical tax expense deduction only if your total unreimbursed medical expenses exceed 7.5% of your adjusted gross income (AGI). You can reduce your mileage at the standard rate of 18 cents per mile for 2022 and 16 cents per mile for 2021, or you can reduce your actual gas and oil costs. Reductions in parking fees and tolls are also allowed.

You are allowed to reduce the mileage for your own treatment. You can also claim this deduction if you bring your child to receive treatment or visit a mentally ill dependent as part of the recommended treatment.

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Who Can Deduct Mileage for Charitable Causes?

If you are traveling to do volunteer work, you can reduce the standard amount for the year. Alternatively, you can reduce your oil and gas costs but not reduce other vehicle costs such as depreciation, maintenance, insurance, and costs.

You can also deduct parking and toll fees when you volunteer, no matter which deduction method you choose.

How to Claim Mileage on Your Taxes

If you claim a deduction for business mileage, you will report it using Schedule C on Form 1040. To claim a deduction for moving mileage, medical treatment, or charitable deductions, you must specify when you return. You will do this using Schedule A on your Form 1040.

No matter what type of mileage you deduct, be sure to keep thorough records. Keep a mileage log if you use standard IRS mileage rates, or keep a receipt if you deduct actual costs. Be sure to keep it with your other tax records so you’ll be protected in the event of an audit.

Frequently Asked Questions (FAQ)

Is the mileage for round-trip or one-way tax?

If you’re using a standard mileage fare, multiply it by the total mileage for a round trip you’ve driven for business, moving, medical, or charitable reasons.

How to track mileage for taxes?

If you keep written records for mileage deductions, you must include the date, destination, destination, and mileage for each trip.

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