Schedule C Car and Truck Expenses: Mileage, Actual Costs, Depreciation

On Schedule C (Form 1040), you deduct car and truck expenses using one of two methods: the standard mileage rate, which is 72.5 cents per business mile for 2026, or the actual expense method, where you add up every operating cost for the year and multiply by your business-use percentage.¹ The deduction goes on Line 9 of Schedule C, and for many sole proprietors and independent contractors it is one of the largest write-offs on the return.² The method you pick in the first year the vehicle is available for business use locks in rules you’ll live with for the rest of that car’s life.

Which Miles Actually Count

Only miles driven for the specific purpose of conducting business are deductible, and every expense you claim has to be ordinary and necessary for your trade or business.³ Trips between home and a regular place of work are commuting miles, and they are never deductible, even if you take business calls on the drive or carry tools in the back.⁴ Personal errands are out too.

One important exception: if you have a qualifying home office that serves as your principal place of business, trips from your home to client sites or other work locations become deductible business miles rather than commuting.⁴ The home office has to meet the regular and exclusive use test, but when it does the deduction can swing by thousands of dollars a year.

The Mileage Log

A contemporaneous mileage log is the single most important piece of documentation for this deduction. Contemporaneous means you record each trip around the time it happens, not in a weekend sprint before your tax appointment. Each entry needs the date, destination, business purpose, and miles driven, and you also need to record the vehicle’s odometer reading at the start and end of the tax year.⁵ Without a log, the IRS can disallow your entire vehicle deduction. A phone app that tracks trips by GPS is the easiest way to build a defensible record.

Part IV of Schedule C asks whether you have evidence to support your vehicle deduction and whether that evidence is written. Answering “no” to the written-evidence question is essentially inviting scrutiny.

The Standard Mileage Rate

The standard mileage rate is the simpler calculation. Multiply your documented business miles by 72.5 cents for 2026. Ten thousand business miles produces a $7,250 deduction.¹

The rate is built to cover gas, oil, repairs, maintenance, insurance, and depreciation all in one number, so you cannot deduct those costs separately on top of it. You can still deduct business-related parking fees and tolls.⁶

The standard mileage rate is unavailable if you use five or more vehicles simultaneously in your business, such as in a fleet.⁷ It’s also off the table if you previously claimed MACRS depreciation, Section 179 expensing, or bonus depreciation on the vehicle.

The First-Year Election Trap

If you own the vehicle, you have to choose the standard mileage rate in the first year the car is available for business use. Pick the actual expense method that first year and you lose the option to ever use the standard mileage rate for that vehicle.⁴ The flexibility runs one direction: start with the standard mileage rate and you can switch to actual expenses later, but if you do, you’re limited to straight-line depreciation over the vehicle’s remaining useful life.

For a leased vehicle the rule is stricter. If you choose the standard mileage rate on a lease, you must use it for the entire lease period, including renewals.¹

The Actual Expense Method

Under the actual expense method you track every dollar spent on operating the vehicle during the year and deduct the business-use percentage. That percentage is total business miles divided by total miles driven. Drive 15,000 miles total with 12,000 for business, and your business-use percentage is 80%.

Deductible operating costs include:

Fuel and oil, including charging costs for electric vehicles
Repairs and maintenance, from oil changes to transmission work
Insurance premiums
Registration fees and licensing
Lease payments, if you lease rather than own
Garage rent, if you pay for a separate parking space
Loan interest on a vehicle loan⁸

Personal property taxes assessed on the vehicle based on its value are deductible on Schedule C, Line 23, but only the business-use portion, and you can’t also claim that portion as a personal deduction on Schedule A.⁸

Total the expenses, multiply by your business-use percentage, and add depreciation (calculated separately) on top.

Depreciation, Section 179, and Bonus Depreciation

When you own the vehicle and use the actual expense method, you recover the purchase price through depreciation. Vehicles are five-year property under MACRS.⁹ Only the business-use portion of the vehicle’s cost is depreciable, and business use must exceed 50% to qualify for Section 179 or bonus depreciation.

Section 179 lets you expense the full business-use cost of a qualifying vehicle in the year it’s placed in service. The general 2026 Section 179 limit is $2,560,000, but passenger automobiles are subject to much lower caps.¹⁰ Legislation enacted after the original Tax Cuts and Jobs Act phase-down restored 100% bonus depreciation, so the full cost of qualifying new and used vehicles can be written off immediately, subject to those caps.¹¹

Luxury Auto Caps for Passenger Vehicles

Annual dollar limits cap depreciation on any four-wheeled passenger vehicle made primarily for use on public roads with a gross vehicle weight of 6,000 pounds or less. For passenger automobiles placed in service in 2026, the first-year cap is $20,300 with bonus depreciation or $12,300 without. The second-year cap is $19,800, the third-year cap is $11,900, and each year after is $7,160.¹¹ The $8,000 first-year difference is the entire practical effect of bonus depreciation for most passenger cars.

Heavy Vehicles Over 6,000 Pounds

Trucks, vans, and SUVs with a gross vehicle weight rating above 6,000 pounds escape the passenger automobile caps, which dramatically expands the first-year deduction.⁴ The rules split:

SUVs rated 6,001 to 14,000 pounds GVWR: Section 179 is capped at $32,000 for 2026, but bonus depreciation can cover the rest with no luxury cap.
Trucks and vans over 6,000 pounds with a cargo bed at least six feet long, or other qualifying non-personal-use configurations: eligible for the full Section 179 deduction up to $2,560,000, plus bonus depreciation.¹²

The 50% business-use threshold isn’t a one-time test. If business use drops to 50% or below in any later year, you may have to recapture a portion of the accelerated depreciation you previously claimed, owing tax on the difference between what you deducted and what straight-line would have allowed.

Leased Vehicles and the Inclusion Amount

If you lease and use the actual expense method, you deduct the business-use percentage of your lease payments as an operating expense. The IRS then requires you to reduce that deduction by an annual “lease inclusion amount” if the vehicle’s fair market value exceeds a threshold when the lease begins. The rule prevents lessees from sidestepping the depreciation caps that apply to owners.¹¹ For leases beginning in 2026, the inclusion amount kicks in when the vehicle’s fair market value exceeds $62,000. The higher the value, the larger the inclusion. Table 3 in Revenue Procedure 2026-15 lists the exact dollar amounts by value range.

Heavy vehicles with a GVWR above 6,000 pounds are generally exempt from the lease inclusion requirement, since they aren’t subject to the luxury auto caps in the first place.

Where It Goes on the Return

Vehicle operating expenses go on Schedule C, Part II, Line 9.⁸ If you claimed depreciation or Section 179 expensing under the actual expense method, that portion goes on Line 13, and you must also file Form 4562 (Depreciation and Amortization) with your return.¹³ Lease payments for vehicles are reported on Line 20a.

Net profit or loss from Schedule C, Line 31, flows to Schedule 1 (Form 1040), Line 3, where it becomes part of your adjusted gross income.¹⁴ It also feeds Schedule SE for self-employment tax, so a legitimate vehicle deduction reduces both income tax and self-employment tax. Each dollar is worth more than it looks.

Keeping Records Long Enough

The standard rule is to keep records supporting a deduction for at least three years from the date you filed the return.¹⁵ Vehicle records deserve extra attention because they relate to depreciable property. The IRS says to keep records tied to property until the statute of limitations expires for the year you dispose of the vehicle. In practice, buy a truck in 2026 and sell it in 2032, and you need the original purchase records, mileage logs, and depreciation schedules through at least 2035. Losing a log years after the fact can cost you the entire deduction in an audit, even if you drove every mile you claimed.

1
Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents per Mile
2
Internal Revenue Service. About Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)
3
Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses
4
Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
5
Internal Revenue Service. Standard Mileage Rates
6
Internal Revenue Service. Topic No. 510, Business Use of Car
7
Internal Revenue Service. Revenue Procedure 2019-46
8
Internal Revenue Service. 2025 Instructions for Schedule C (Form 1040)
9
Internal Revenue Service. Depreciation Frequently Asked Questions
10
Office of the Law Revision Counsel. 26 USC 179 – Election to Expense Certain Depreciable Business Assets
11
Internal Revenue Service. Revenue Procedure 2026-15
12
Internal Revenue Service. Instructions for Form 4562 (2025)
13
Internal Revenue Service. Form 4562 – Depreciation and Amortization (2025)
14
Internal Revenue Service. Instructions for Schedule C (Form 1040) (2025) – Section: Line 31
15
Internal Revenue Service. How Long Should I Keep Records