This is in the top five conversations we have with newer business owners: "Can I deduct my car payments? If I buy a new vehicle, will that help me on my taxes?" The answer: likely yes, but it depends.
Disclaimer: this is a very brief summary. Check with your tax advisor about your specific fact pattern before taking any tax positions.
Option 1: the standard mileage rate
You can deduct a standard amount per business mile driven in a year. The IRS updates this rate every year, and sometimes mid-year: the rate for the second half of 2026 is 76 cents per mile (up from 72.5 cents in the first half). So 10,000 business miles at 76 cents means a $7,600 mileage deduction. The rate is intended to cover all of your vehicle expenses, including depreciation, gas, repairs, and maintenance (note interest is sometimes treated separately). With the standard mileage rate, you do not have to keep receipts for gas, repairs, or maintenance.
Then comes the dreaded look when people picture a paper mileage log. You do need substantiation for each business mile, including the business purpose of the trip. In former times that meant written documentation. Today, software makes it far easier.
If you use QuickBooks Online, a mileage tracker is already built in. It runs in the background from your phone's GPS, and you identify trips as business or personal on whatever schedule suits you. Mark your home and work locations and it codes those trips automatically. You can also flag the vendors and customers you visit often so those trips code themselves. Slick automation, and we love it.
Option 2: actual expenses
You can instead deduct the actual expenses you incur for business use. If the vehicle is 100 percent business use, you can generally depreciate the vehicle itself (some limitations apply) and deduct all of your gas, repairs, and maintenance. The downside: you must keep every receipt, then account for and summarize all of those expenses. If business use is above 50 percent but below 100, you deduct the business-use percentage of your costs.
These concepts apply to purchased vehicles. Leased vehicles carry several other considerations outside the scope of this post. There are many facts to weigh, but we generally default to Option 1: quicker, easier, fewer receipts, and usually a fair deduction. We tend to recommend the actual method for more expensive vehicles ($50K plus) and trucks pulling trailers that burn a lot of gas.
If you have questions, reach out. We are happy to have a conversation.
