Business Use of Personal Vehicle Deduction

Business Use of Personal Vehicle Deduction

The Business Use of Personal Vehicle Deduction allows taxpayers to deduct expenses related to the business use of a personal vehicle from their taxable income. This deduction can be claimed by self-employed individuals, sole proprietors, or employees who use their personal vehicles for business purposes.

There are two primary methods for calculating this deduction:

1. Standard Mileage Rate Method: Taxpayers can deduct a specific amount per mile driven for business purposes. For example, if the standard mileage rate is set at 58 cents per mile and a taxpayer drives 1,000 miles for business, they could deduct $580.

2. Actual Expense Method: Taxpayers can deduct the actual costs associated with the vehicle’s business use, including gas, repairs, insurance, depreciation, and registration fees. This method requires detailed record-keeping to substantiate the expenses.

To qualify for the deduction, taxpayers must maintain accurate records of their business mileage and ensure that the vehicle is primarily used for business activities during the time the deduction is claimed.