Manage my business

Can you deduct gasoline and mileage on your taxes?

Updated January 2020

If you use a personal vehicle for business reasons, you can take many deductions for your car. This potentially includes the cost of gasoline. But, can you deduct gasoline and mileage on your taxes? Here’s what you should know.

Can you claim gasoline on your taxes?

Yes, you can deduct the cost of gasoline on your taxes. Use the actual expense method to claim the cost of gasoline, taxes, oil and other car-related expenses on your taxes.

Can you claim gasoline and mileage on taxes?

No. If you use the actual expense method to claim gasoline on your taxes, you can’t also claim mileage. The standard mileage rate lets you deduct a per-cent rate for your mileage.

For 2019, you can claim:

  • 58 cents per business mile
  • 20 cents per mile for medical miles & moving miles
  • 14 cents per mile for charity drives

The standard mileage rate for 2020 declines slightly:

  • 57.5 cent per business mile
  • 17 cents per mile for medical or moving purposes
  • 14 cents per mile for charity drives

Who can claim gasoline or mileage on taxes?

You can claim car-related deductions if you’re self-employed, a small business owner or a freelancer. Those with a 1099 tax form can easily claim a mileage deduction every year.

If you’re a W2 employee, you can deduct car-related expenses if you itemize your deductions and it exceeds 2 percent of your adjusted gross income (AGI).

Should you use the mileage rate for your deduction?

It’s important to note the limitations of the actual expense method. If you use this to claim costs like gasoline for the first year of your business vehicle, you can only use that method for the life of the car. You can use the standard mileage rate for the first year and then swap between methods in future tax years.

A safe way to go is to use the standard mileage rate for the first year your car is in service. From there, you can calculate the value of your vehicle deduction using each method and choose the one that’s more valuable.

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Business Insights and Ideas does not constitute professional tax or financial advice. You should contact your own tax or financial professional to discuss your situation.