Are Tolls a Business Expense? Commuting Rule and Who Qualifies

Tolls count as a business expense and are deductible on your federal return when you pay them while driving for business, provided you are self-employed. If you use the standard mileage rate, tolls come off on top of the mileage deduction rather than being folded into it. If you use the actual expense method, tolls are part of your total vehicle costs, deducted at your business-use percentage. The catch: tolls paid on your normal commute between home and your regular workplace are personal expenses, and W-2 employees generally cannot deduct unreimbursed business tolls at all.

Which Tolls the IRS Allows

The test is the same one that governs every business deduction. The expense must be ordinary (common in your line of work) and necessary (helpful and appropriate for your business); it does not have to be indispensable.¹ Applied to tolls, that generally means the charge was paid on a trip tied to producing income.

Driving between work locations during the workday, such as from your office to a client site, vendor, or second business location.
Visiting clients or customers for sales calls, deliveries, or service work.
Driving to a temporary work location where the assignment is realistically expected to last one year or less.
Traveling to a business meeting, trade convention, or continuing education event that benefits your trade or business.

Rideshare and delivery drivers fall under the same rules. Tolls paid while you have a passenger or an active delivery are deductible, and so are tolls on the way to your first pickup of the day if you are not starting from your regular place of business.¹

The Commuting Rule Kills Most Home-to-Work Tolls

Tolls you pay driving between your home and your regular place of business are personal expenses. Distance, frequency, and whether you take work calls on the drive make no difference. Revenue Ruling 99-7 states plainly that transportation between a taxpayer’s home and a regular place of business is a nondeductible personal expense.²

A home office does not automatically change that. If your home office does not qualify as your principal place of business under the tax code, driving from home to your regular office is still commuting. Only when the home office qualifies as your principal place of business do tolls for trips from home to other work locations become deductible.²

The Temporary Assignment Exception

If you drive from home to a work location where the assignment is realistically expected to last one year or less, tolls on that trip are deductible regardless of distance. Once the assignment is expected to run beyond one year, the location becomes regular and the commuting exclusion applies.¹

Hauling Tools Does Not Convert a Commute

Carrying tools or equipment in your vehicle on a commute does not turn the trip into business travel. The tolls stay personal. You can deduct any added cost caused by hauling the equipment, such as renting a trailer, but not the toll itself.¹

W-2 Employees Are Mostly Out of Luck

The Tax Cuts and Jobs Act eliminated the deduction for unreimbursed employee expenses starting in 2018, and the One Big Beautiful Bill Act made that elimination permanent. Employees used to claim unreimbursed business tolls as a miscellaneous itemized deduction on Schedule A. That path is closed for 2026 and beyond.

The only way for an employee to recover toll costs at the federal level is employer reimbursement under an accountable plan, in which case the reimbursement is excluded from wages and does not appear on the W-2.³ If your employer does not reimburse tolls, you absorb them. Some states still allow unreimbursed employee expenses on state returns, so check your state’s rules before giving up entirely.

Standard Mileage Rate vs. Actual Expenses

Both methods let you deduct tolls, but they do it differently.

Standard Mileage Rate

The 2026 business standard mileage rate is 72.5 cents per mile.⁴ Tolls and parking fees are deducted separately on top of that rate. Drive 500 business miles and pay $40 in tolls in a month, and you deduct $362.50 for mileage plus the full $40 for tolls.¹ Taxpayers often claim the mileage rate and forget the tolls; that is money left on the table.

Actual Expense Method

Under the actual expense method, you deduct the business-use percentage of every vehicle cost: gas, insurance, repairs, depreciation, registration, and tolls. If you use the car 60 percent for business, you deduct 60 percent of each toll. Recordkeeping is heavier, but the deduction can be larger for expensive vehicles or high-maintenance driving.¹

Mixed-Use Trips and Overnight Travel

When a trip combines business and personal driving, only the business portion of your tolls is deductible. Under the standard mileage rate, track which legs are business and which are personal; tolls on business legs count, tolls on personal legs do not. Under the actual expense method, apply your business-use percentage.

Overnight travel follows a different rule. If the primary purpose of the trip is business, travel costs to and from the destination are fully deductible even if you tack on personal days, but expenses during the personal extension are not. If the primary purpose is personal, none of the travel costs to or from the destination qualify.¹

Fines and Late Fees Never Qualify

The toll amount is deductible; the penalty attached to it is not. If you miss a toll and receive a violation notice, the underlying toll (assuming a business trip) can still be deducted, but the fine or administrative penalty cannot. Federal law broadly bars deductions for fines or penalties paid to a government entity for violating any law.⁵ That covers toll violations, late payment penalties on transponder accounts, and non-payment surcharges.⁶

Records to Keep

The IRS wants three things documented for each business toll: the date, the amount, and the business purpose of the trip.¹

Electronic toll account statements from systems like E-ZPass or SunPass do most of the work for you. They log the date, time, location, and amount automatically. Download the statements regularly and annotate the business purpose for each charge, on the statement itself or in a separate log. Cash-lane receipts work too but are easy to lose.

The strongest setup is a contemporaneous log that matches each toll to a specific business trip and lines up with your mileage records for the same period. When a mileage log shows a 45-mile round trip to a client on March 12 and the toll statement shows two charges on the same route that day, the story holds together. Keep supporting documents for at least three years from the date you file the return.⁷

Where Tolls Go on Your Return

Sole Proprietors

Most self-employed filers report tolls on Schedule C. For local business travel using the standard mileage rate, multiply business miles by 72.5 cents, add tolls and parking, and enter the total on Line 9. Under the actual expense method, tolls fold into the total vehicle expenses on the same line.⁸

Tolls paid during overnight business travel away from your tax home go on Line 24a with lodging and other travel costs. Do not report the same toll on both lines.⁸ Net profit from Schedule C flows into your self-employment tax on Schedule SE, so toll deductions reduce both your income tax and your self-employment tax.⁹

Partnerships and S Corporations

Entities cannot use the standard mileage rate at the entity level. If the entity owns the vehicle, tolls are deducted as part of its vehicle operating costs on Form 1065 or Form 1120-S. If a partner or shareholder uses a personal vehicle for entity business, the entity typically reimburses under an accountable plan and deducts the reimbursement. Partners may deduct unreimbursed partnership expenses on their individual returns when the partnership agreement requires them to bear those costs.

1
Internal Revenue Service. Publication 463, Travel, Gift, and Car Expenses
2
Internal Revenue Service. Rev. Rul. 99-7
3
Internal Revenue Service. Rev. Rul. 2003-106
4
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile
5
Office of the Law Revision Counsel. 26 U.S. Code 162 – Trade or Business Expenses
6
Internal Revenue Service. Publication 529, Miscellaneous Deductions
7
Internal Revenue Service. Topic No. 305, Recordkeeping
8
Internal Revenue Service. 2025 Instructions for Schedule C (Form 1040)
9
Internal Revenue Service. Schedule C and Schedule SE