Mileage vs Actual Expenses: Which Vehicle Deduction Saves More?
Deducting a car for business? You choose the standard mileage rate or actual expenses. Here is how each works, the switching rules, and how to decide which saves more.
Mylo Team • September 4, 2026 • 2 min read
The short answer
When you deduct a car for business you pick one of two methods: the standard mileage rate, a flat amount per business mile, or actual expenses, the business share of what the car really costs. Standard mileage is simpler and often wins for efficient cars with high mileage; actual expenses can be larger for costly vehicles. Both require a mileage log.
How each method works
The standard mileage rate multiplies your business miles by the IRS rate for the year, and that single number covers gas, maintenance, and depreciation. See the current figure in the IRS mileage rate for 2026. The actual-expense method adds up gas, oil, repairs, insurance, registration, and depreciation, then multiplies by your business-use percentage. It takes far more record-keeping but reflects a pricey vehicle better.
The switching rules that matter
The order you choose methods matters. If you use the standard mileage rate in the first year the vehicle is in service for business, you generally keep the option to switch to actual expenses later. If you start with actual expenses, you usually have to stay with actual for that vehicle. Leased vehicles have their own rule: if you use the standard rate, you generally must use it for the whole lease.
How to decide, and what to keep
Run the numbers both ways for a typical year. Either way you need a mileage log, so start with a mileage log template, and if you use actual expenses, keep the fuel and repair receipts. Fold it into how you keep track of business expenses so the choice is backed by records, not reconstruction.
The faster way: let Mylo keep the proof automatically
This is where Mylo quietly does the heavy lifting. It works in the background to capture every receipt from your inbox and the stores you shop at, matches each one to the card charge that paid for it, and files it as a categorized expense, so when you claim your vehicle costs the proof is already there. No new card and no manual entry: Mylo works on top of the Visa, Mastercard, or Amex you already use, and syncs clean, categorized expenses to QuickBooks. Free for individuals on iOS, Android, and the web; teams are $9/user/mo (30-day free trial).
Sources: IRS guidance on car and truck expenses (Publication 463). This article is general information, not tax advice. Rules change and situations differ, so check with a qualified tax professional for your situation.
Frequently asked questions
Which method gives a bigger deduction?
It depends on the vehicle and how you drive. High business mileage in an inexpensive, efficient car often favors the standard rate; an expensive vehicle with high running costs often favors actual expenses. Run both to see.
Can I switch between methods?
If you use the standard mileage rate in the first year the car is used for business, you can generally switch to actual expenses in later years, with some depreciation rules. If you start with actual expenses, you usually must keep using actual for that vehicle.
Do I need a mileage log either way?
Yes. Both methods require a record of your business miles and the business-use percentage. A contemporaneous log is the strongest support if you are ever asked.
How does Mylo help?
Mylo captures your fuel and vehicle receipts automatically for the actual method, and works alongside a mileage log, so whichever method you choose is backed by real records.
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