You cannot claim the standard mileage rate and a separate depreciation deduction on the same vehicle in the same tax year. The IRS treats the two as mutually exclusive methods, and the standard mileage rate — 72.5 cents per mile for 2026 — already includes a 35-cent-per-mile depreciation allowance.1Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents per Mile, Up 2.5 Cents Adding a depreciation deduction on top of the mileage rate would count the same expense twice. If you want to deduct depreciation as its own line item, you have to use the actual expenses method instead.
Why the Standard Mileage Rate Already Includes Depreciation
The 72.5-cent rate is a single per-mile figure meant to cover every ordinary cost of operating a vehicle for business: gas, oil, insurance, repairs, and depreciation. Of that total, the IRS attributes 35 cents per mile to depreciation for 2026. You multiply the rate by your business miles and take the result as your deduction; you do not track fuel receipts, insurance bills, or a depreciation schedule alongside it.
The only vehicle costs that stack on top of the mileage rate are parking fees and tolls tied to business travel.2Internal Revenue Service. Topic No. 510, Business Use of Car Everything else — including any additional depreciation claim — is off the table for that year. The 35-cent depreciation component still matters even though you never see it on a form: it reduces your cost basis in the vehicle each year, which affects the gain you calculate when you eventually sell or trade it in.
How to Claim Depreciation: The Actual Expenses Method
Depreciation as a distinct deduction only exists under the actual expenses method. Instead of a per-mile figure, you total your real operating costs for the year — gas, oil, tires, repairs, insurance, registration, and the business portion of lease payments or loan interest — and multiply by the percentage of miles you drove for business.2Internal Revenue Service. Topic No. 510, Business Use of Car Depreciation is then added as its own item.
Passenger vehicles are depreciated over five years under the Modified Accelerated Cost Recovery System (MACRS).3Office of the Law Revision Counsel. 26 USC 168 – Accelerated Cost Recovery System Annual amounts are capped. For vehicles placed in service during 2025, the first-year limit is $20,200 with bonus depreciation or $12,200 without it, $19,600 in year two, $11,800 in year three, and $7,060 in each later year.4Internal Revenue Service. Rev. Proc. 2025-16 The IRS updates these caps annually, so check for 2026 figures when they publish.
Parking and tolls remain separately deductible under this method too.2Internal Revenue Service. Topic No. 510, Business Use of Car Recordkeeping is heavier, but for expensive vehicles or high-maintenance ones, actual expenses plus depreciation frequently produces a larger deduction than the mileage rate would.
Heavy Vehicles, Section 179, and Bonus Depreciation
The luxury-auto caps above apply differently to vehicles with a gross vehicle weight rating over 6,000 pounds. Many full-size SUVs, pickups, and vans in that range qualify for Section 179 expensing and bonus depreciation, which together can absorb most or all of the business-use portion of the purchase price in year one.
The Section 179 deduction for an SUV rated between 6,001 and 14,000 pounds GVWR is capped at $32,000 for 2026. Vehicles above 14,000 pounds are not subject to that SUV-specific cap and can be expensed up to the overall Section 179 limit of $2,560,000 for 2026, which begins phasing out once total qualifying purchases exceed $4,090,000. The One, Big, Beautiful Bill restored 100% bonus depreciation for qualifying property acquired after January 19, 2025, so a qualifying heavy vehicle placed in service in 2026 can take Section 179 plus 100% bonus depreciation on any remaining depreciable cost.5Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill None of this is available under the standard mileage rate.
The 50% Business Use Requirement
Accelerated MACRS depreciation, Section 179, and bonus depreciation are only available if you use the vehicle more than 50% for business in the tax year.6Office of the Law Revision Counsel. 26 USC 280F – Limitation on Depreciation for Luxury Automobiles At or below 50%, you have to use the slower straight-line alternative depreciation system. If your business use falls to 50% or less after you already took accelerated depreciation or Section 179, you must recapture the excess — the difference between what you deducted and what straight-line would have allowed — and report it as income for the year the drop happens. From that point on, you depreciate the vehicle using straight-line for its remaining life.
The First-Year Choice Locks In Long-Term Options
Your method choice in the first year the vehicle is available for business use governs what you can do later. To use the standard mileage rate on a vehicle you own, you have to elect it in that first year.2Internal Revenue Service. Topic No. 510, Business Use of Car After that, you can stay with the mileage rate or move to actual expenses in a later year. For a leased vehicle, choosing the mileage rate locks you in for the full lease term, including renewals.7Internal Revenue Service. Publication 463 (2024), Travel, Gift, and Car Expenses – Section: Standard Mileage Rate
Going the other direction is more limited. If you claimed MACRS accelerated depreciation, Section 179, or bonus depreciation on the vehicle in any prior year, you cannot later switch to the standard mileage rate for it.2Internal Revenue Service. Topic No. 510, Business Use of Car And if you started with the mileage rate and later switch to actual expenses, the depreciation portion of your later deduction has to be figured using straight-line over the vehicle’s estimated remaining useful life. MACRS is no longer available for that vehicle.7Internal Revenue Service. Publication 463 (2024), Travel, Gift, and Car Expenses – Section: Standard Mileage Rate
The practical effect: starting with the mileage rate preserves flexibility. Starting with actual expenses and accelerated depreciation effectively commits you to actual expenses for as long as you use that vehicle for business.
Depreciation Still Counts When You Sell
Because the mileage rate contains a depreciation component, the IRS treats you as having taken depreciation even in years you never filled out a depreciation form. When you sell or trade the vehicle, the total depreciation deemed taken over all the mileage-rate years — 35 cents per mile at the 2026 rate, with different figures for earlier years — reduces your basis for calculating gain or loss.8Internal Revenue Service. Publication 463 (2024), Travel, Gift, and Car Expenses – Section: Disposition of a Car
If the sale price exceeds that reduced basis, the gain up to the amount of prior depreciation is taxed as ordinary income rather than as a capital gain. That is depreciation recapture, reported on Form 4797, and any remaining gain beyond total depreciation taken is treated as a Section 1231 gain.9Internal Revenue Service. Instructions for Form 4797 – Sales of Business Property The same rules apply whether the depreciation was claimed explicitly through the actual expenses method or absorbed silently into the mileage rate. In other words, you cannot avoid recapture by choosing the mileage rate — you simply track it differently.
Choosing Between the Two
The question of whether to claim depreciation separately is really a question of which method to use. The mileage rate is simpler, requires only a mileage log, and is often the better fit for fuel-efficient or lower-cost vehicles driven many business miles. The actual expenses method with depreciation tends to produce a larger deduction for expensive vehicles, heavy SUVs and trucks eligible for Section 179 or bonus depreciation, and vehicles with high operating costs relative to miles driven. Whichever you choose, you are choosing depreciation treatment along with it — you are not choosing whether to deduct depreciation, only how.