Ah, the great American road-trip. Hitting the open road with all the snacks, music and friends you can fit in your car to see the sights. With the increasing cost of airfare and companies looking to cut costs, more and more business travel might resemble the car trips of your youth. Whether you are an employee driving your personal vehicle for business purposes or someone self-employed starting on their taxes, you’ll need to know how to calculate mileage.

The IRS sets an official mileage rate each year that you can use to calculate your deduction or reimbursement. The 2024 IRS rate was 67 cents per mile and they recently released the new rate for 2025 at 70 cents per mile. You will multiply the number of miles you have traveled by the rate you are using, so for example:

1200 miles traveled x 0.70 = a reimbursement of $840.

However, be aware that your employer is not required to use the IRS’ set rates for reimbursement and can choose whatever rate they want. In fact, they are not required to reimburse you at all. If you are self-employed, you can claim a deduction on your taxes if you have been tracking the miles you have traveled for work purposes. You’ll need to decide however if you want to use the standard mileage deduction we just discussed or the actual expenses method.

If vehicle expenses are a major part of your business, it might make sense to utilize the actual expenses method instead. This entails keeping track of all of your vehicle expenses throughout the year and then calculating what percentage of the car was utilized for business purposes. You will still need to track your mileage in order to determine the business miles vs. personal miles in order to determine the business percentage. You will then use that to calculate your deduction but keep in mind that you will need receipts for all expenses in order to use this method. Some examples of expenses you might track would be gas, lease payments, repairs, insurance, maintenance, and registration fees.

It’s important to think carefully before deciding to use the actual expenses method for the first year that you deduct vehicle expenses for your business. This is because if you use the actual expense method, you won’t be able to use the standard deduction method in the years following. It’s helpful to calculate using both methods and then see which one offers a better deduction.

Some view work travel as an exciting perk and some as a pesky annoyance but either way, you’ll need to keep track of all of your expenses and/or mileage in order to receive reimbursement from your employer or a deduction on your taxes. Figuring out which travel qualifies as business related, especially when intertwined with non-business activities, can be confusing and complicated. If you have any questions related to deducting mileage expenses, tax planning for your vehicles as a small business or any other tax related matters, we’d love to help! Reach out to a ClarkSilva team member today.