Simple definition
The mileage deduction lets you subtract the cost of business driving from your self-employment income. The simplest method multiplies your business miles by the IRS standard mileage rate, which is set each year. The alternative is deducting the actual costs of operating the vehicle for business use. Either way, commuting from home to a regular workplace does not count.
Why it matters
For anyone with 1099 income who drives — a contractor between job sites, a rideshare driver, someone hauling tools to a weekend gig — this is usually the largest deduction available, and it's lost entirely without a record. Miles you can't document are miles you can't deduct, and reconstructing a year at tax time never gets you the real number.
Real-life example
An HVAC contractor drives 7,000 business miles across the year, tracked in an app that logs each trip and its purpose. At the standard rate for that tax year, those miles come off his business income before self-employment tax is calculated — a deduction he'd have had no way to prove without the log.
Formula
Deduction = business miles × the IRS standard mileage rate for that tax year
Common mistakes
- Counting the ordinary commute between home and a regular workplace, which isn't deductible.
- Keeping no contemporaneous log and estimating at filing time.
- Mixing methods year to year without understanding the rules on switching.
- Deducting mileage as an employee — that deduction is not available to most W-2 workers.
Pro tips
- Use an app that logs trips automatically; the discipline problem is the whole problem.
- Record the date, the miles, and the business purpose — purpose is what makes the entry hold up.
- Note your odometer on January 1 and December 31 each year.
- Look up the current year's standard rate before you calculate; it changes annually.
Related Money Dictionary terms
- Self-Employment TaxThe Social Security and Medicare tax that self-employed people pay to cover both the employee and employer shares.
- Tax DeductionAn expense you can subtract from your income to lower the amount that gets taxed.
- Estimated TaxesPayments made throughout the year on income that has no tax withheld, such as freelance or investment earnings.
- 1099A family of forms reporting income you earned outside a regular job, such as freelance work or investment payouts.
- Taxable IncomeThe portion of your income left after deductions that the government actually applies tax rates to.
- Side IncomeExtra money earned outside your main job, such as from freelancing, a side business, or a part-time gig.
Frequently asked questions
Can I deduct mileage if I'm a W-2 employee?
Generally no. The deduction for unreimbursed employee expenses is not available to most employees under current law, so ask your employer about a mileage reimbursement instead — that's the route that actually pays.
Which is better, standard mileage or actual expenses?
It depends on the vehicle and how much you drive; an older, cheap-to-run car often does better on the standard rate, an expensive one on actual costs. The IRS sets rules on when you can switch, so check before assuming you can pick fresh each year.
What counts as a business mile?
Driving between job sites, to a client, to pick up supplies, or to a temporary work location generally counts. Your daily drive from home to a regular workplace generally does not.
Knowing what Mileage Deduction means is knowledge — the first half. A brick gets placed when you act on it: install a mileage-tracking app before your next work drive, and log that trip.
Also builds: Self-Employment & Side Income
Sources & references
More in Taxes
Plain-English education — not personalized legal, tax, or investment advice.