How to Deduct Car and Truck Expenses on Schedule C: Methods and Caps

To deduct car and truck expenses on Schedule C, you pick one of two methods, apply it to the miles you drove for business during the year, and enter the total on Line 9. The first method is the IRS standard mileage rate, which is 72.5 cents per mile for 2026.¹ The second is the actual expenses method, where you total every operating cost for the vehicle and multiply by your business-use percentage. Both methods require a mileage log; the actual expenses method also requires receipts.

Which Miles Count as Business Miles

Only business driving produces a deduction. That includes trips from your office to a client, runs for supplies, and travel between two work locations. Commuting between your home and your regular workplace is personal and never deductible.²

There is one exception that matters. If your home office qualifies as your principal place of business, trips from home to any other work location in the same business count as deductible business miles rather than commuting.³ Check the requirements in Publication 587 before relying on this, because it can convert a large share of your driving from nondeductible to deductible.

To calculate your business-use percentage, divide business miles by total miles for the year. Record odometer readings on January 1 and December 31 to fix the total. That percentage drives everything under the actual expenses method.

The Standard Mileage Rate Method

Take your business miles for 2026 and multiply by $0.725.¹ Add business-related parking fees and tolls separately; those are not built into the rate.⁴ The combined figure goes on Line 9. Under this method you cannot also deduct gas, insurance, repairs, depreciation, or lease payments.

Eligibility Rules

You must own or lease the vehicle. You must also have used the standard rate in the first year the vehicle went into service for business. If you started with actual expenses and claimed accelerated depreciation, Section 179, or bonus depreciation, you are permanently barred from the standard rate on that vehicle. And if you operate five or more vehicles at once, as a fleet, the standard rate is off the table.⁵

Switching Methods Later

If you own the vehicle and used the standard rate in year one, you can switch to actual expenses in a later year. Going the other direction is where taxpayers get stuck. Once you claim accelerated depreciation or Section 179, you cannot switch back.⁵ For a leased vehicle, if you pick the standard rate you must stay with it for the entire lease.²

The Actual Expenses Method

Track every operating cost for the vehicle during the year, total them, and multiply by your business-use percentage. The paperwork is heavier, but the deduction is often larger when the vehicle is expensive to run or when business use is a high share of total miles.

Deductible operating costs include fuel (gasoline, diesel, or electricity), maintenance and repairs such as oil changes and tires, insurance premiums, registration fees, lease payments if the vehicle is leased, and business parking and tolls. If you own rather than lease, you claim depreciation in place of lease payments, subject to the caps described below.²

Loan Interest and Personal Property Tax

Two costs often get missed. If you financed the vehicle, the business-use share of the loan interest is deductible on Schedule C.⁴ The personal-use share of that interest is not deductible anywhere. State or local personal property tax on the vehicle splits the same way, with the business share on Schedule C and the personal share available on Schedule A if you itemize.⁶ The tax must be based on the vehicle’s value; a flat registration fee does not count.

Lease Inclusion Amount

If you lease a vehicle with a fair market value above $62,000 when the lease begins in 2026, you must reduce your lease payment deduction by an inclusion amount from Table 3 of Rev. Proc. 2026-15.⁷ At $62,000 or below, no inclusion amount applies.

Depreciation Caps and Section 179 on Owned Vehicles

Depreciation is usually the biggest piece of an owned-vehicle deduction under the actual expenses method. The IRS caps how much you can claim each year on a passenger automobile, meaning a four-wheeled vehicle made primarily for public roads and rated at 6,000 pounds gross vehicle weight or less.⁸

2026 Annual Caps

For passenger automobiles placed in service in 2026, the maximum yearly depreciation, including any Section 179 and bonus depreciation, is:

Year 1 with bonus depreciation: $20,300
Year 1 without bonus depreciation: $12,300
Year 2: $19,800
Year 3: $11,900
Each later year: $7,160

These figures come from Rev. Proc. 2026-15 and apply to the business-use portion only.⁷ At 60% business use, the effective first-year cap with bonus depreciation is $12,180. Anything you cannot deduct because of the cap carries forward to later years at the $7,160 annual limit until the vehicle’s cost is fully recovered.

Heavy Vehicles and Section 179

Trucks, vans, and SUVs with a gross vehicle weight rating above 6,000 pounds fall outside the passenger automobile definition, so the annual caps above do not apply to them.⁸ SUVs rated between 6,000 and 14,000 pounds have their own Section 179 cap of $32,000. Vehicles above 14,000 pounds, such as many commercial trucks, have no SUV-specific cap and can qualify for a full Section 179 write-off up to their cost. Remember the trade-off: claim Section 179 or bonus depreciation on a vehicle and you can never use the standard mileage rate for it.⁵

Records the IRS Expects

The IRS wants contemporaneous records, which means logging trips close to when they happen rather than reconstructing the year at tax time. Weak documentation is the fastest way to lose the deduction in an audit.

At a minimum, keep a mileage log with the date, destination, business purpose, and miles for each trip; odometer readings at the start and end of the year; and, if you use actual expenses, receipts for fuel, repairs, insurance, and every other cost you claim. The mileage log is foundational. Without it, the IRS can disallow the whole deduction no matter how many receipts you produce. GPS-based smartphone apps are widely accepted and more reliable than a paper log filled in months later.⁶

Where It Goes on Schedule C

The total deduction goes on Schedule C, Line 9, labeled “Car and truck expenses.” It reduces both your income tax and your self-employment tax.²

Part IV of Schedule C

If you use the standard mileage rate, lease the vehicle, or drive a fully depreciated one, complete Part IV of Schedule C. It asks for total, business, commuting, and personal miles for the year and whether you have written, contemporaneous evidence.²

When You Need Form 4562

File Form 4562, Depreciation and Amortization, alongside Schedule C if you are claiming depreciation on a vehicle for the first time or reporting Section 179 or bonus depreciation. You also need it if you are depreciating any other business asset that year. Vehicle information goes in Part V of Form 4562, which asks the same usage questions as Part IV of Schedule C.⁹ When you file Form 4562, skip Part IV of Schedule C.

Penalties for Overstating the Deduction

Inflating vehicle expenses or fabricating mileage can trigger the accuracy-related penalty under IRC 6662, which adds 20% of the underpaid tax to your bill.¹⁰ If the overstatement rises to a gross valuation misstatement, the penalty doubles to 40%. Vehicle deductions draw audit attention because the line between personal and business use is easy to blur, and a contemporaneous mileage log is the strongest defense against both disallowance and penalties.

1
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents
2
Internal Revenue Service. 2025 Instructions for Schedule C (Form 1040)
3
Internal Revenue Service. Publication 587, Business Use of Your Home
4
Internal Revenue Service. Instructions for Schedule C (Form 1040)
5
Internal Revenue Service. Topic No. 510, Business Use of Car
6
Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
7
Internal Revenue Service. Rev. Proc. 2026-15 – Depreciation Limitations for Passenger Automobiles Placed in Service During Calendar Year 2026
8
Office of the Law Revision Counsel. 26 USC 280F – Limitation on Depreciation for Luxury Automobiles
9
Internal Revenue Service. 2025 Instructions for Form 4562 – Depreciation and Amortization
10
Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments