Get More Mileage Out Of Your Vehicle Expenses

Posted on March 11th, 2024.

Hey There!

If you need to use a vehicle for business purposes, you can deduct a wide variety of your vehicle-related expenses. The big decision is whether you’ll track each of those expenses individually (actual expense method) or if you’ll simply multiply the number of business miles driven in the year by the IRS’s predetermined mileage rate (standard mileage rate method).

For example, with the actual expense method, you would track all expenses, including gas, repairs, insurance, and maintenance. You would total up all of these costs you incur throughout the year, and that’s the expense amount you’d be able to claim as a tax deduction.

With the standard mileage rate method, you would only track the number of business miles you drove during the year. You’d then multiply that number of miles by the IRS’s rate, which is 56 cents per mile in 2021. So if you drove 10,000 miles for business, your tax deduction would be $5,600. The standard rate method has always been popular because it’s easier to track, but the Tax Cuts and Jobs Act of 2017 made the actual expense method much more appealing...

This is because the actual expense method allows you to include depreciation on your vehicle, and under the newest tax law update, the limits on vehicle depreciation were greatly increased. Also, bonus depreciation can now be applied to many vehicles. Bonus depreciation allows a business to take additional depreciation expense deduction when a vehicle is first put into use, which could result in huge tax savings.

So if you’re still using the standard mileage rate method instead of the actual mileage rate method, you could be leaving thousands of dollars on the table. Additionally, if you have a more expensive vehicle with higher than average repair and maintenance costs, the actual expense method is likely going to be your best bet.

You should have your tax strategist do this calculation for you to see which expense method will create the biggest tax-deductible expense for your business. Would you like me to personally review your situation to see if any of your vehicle expenses could be tax-deductible?

If so, click here to book your free Strategy Session with me. Let’s see if your vehicle could net you thousands of dollars in tax savings each and every year.

Talk soon!


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