Tax Guide

Get answers to all your questions about taxes, personal finance, insurance and more.

Deductible Car Expenses

If you use your personal vehicle for work, you can usually deduct your vehicle expenses. There are two methods available to figure your deductible expenses:

  • Keep track of all of your expenses: gas, oil changes, brake jobs and other repairs, tires, etc.
  • Or just keep track of your mileage, and claim the standard mileage rate of 54 cents per mile (that's the rate for tax year 2016; it usually changes every year).

You can only use one method or the other, and must use it for the whole year. So if you use the standard mileage rate, for example, you cannot also deduct your actual car expenses for that year.

If you want to use the standard mileage rate for a car you own, you’ll have to choose it in the first year you use it for work (which is not necessarily the year you bought it). In later years, you’ll be able to choose either the mileage or the actual expenses method for the year.

If you’re a rural mail carrier who gets a qualified reimbursement, you cannot use the standard mileage rate; you have to use the actual expense method.

No Deduction for Commuting … Usually

One thing you usually cannot deduct is commuting between home and work. But there are a couple of exceptions:

  • If you have to drive from one workplace to another – either as part of your job or if you have more than one job – you can deduct that travel.
  • If your employer has a temporary work site location outside of your regular metro area, you can deduct your travel between your home and the temporary work site. What's temporary? The IRS defines it as when your work there is expected to last a year or less.

See also:
IRS Tax Topic 510
IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses
Instructions for Form 2106 – Employee Business Expenses