Using Your Personal Car for Business? Here’s What You Can Deduct

If you’re a business owner and you’ve used your personal vehicle for anything business-related, you can take a tax deduction. 

However, the IRS (unsurprisingly) requires you to do this a specific way, and it’s not always worth your time. 

Let’s break it down.

Can I Deduct a Personal Vehicle Used for Business?

Yes.

It doesn’t matter whether the vehicle is owned by you personally or by your LLC. What matters is how it’s used. You can deduct vehicle use for things like:

• Driving to client meetings

• Visiting job sites or properties

• Picking up materials or supplies

• Running business errands

Put simply: If the trip has a legitimate business purpose, it counts

But there’s a catch. When the car is used for both personal and business driving, only the business-use portion is deductible. 

How Do I Calculate What’s Deductible?

You have two options:

1. Standard Mileage Method

2. Actual Expense Method

We recommend the Standard Mileage Method for almost everyone. It’s much simpler and in most cases will give you about the same deduction. All you need to do is track your business mileage and multiply it by the IRS rate. 

What Records Do I Need to Keep?

This is the non-negotiable part. You need a mileage log.

No log = no deduction (at least not one that survives an audit). A proper log includes:

• Date

• Miles driven

• Starting and ending location

• Business purpose

Is it a pain? Yes.

Is it important? Yes.

How do I Maximize My Deduction?

You’re probably using your vehicle for business more than you realize. 

First, keep a thorough log. People tend to remember the “big” trips like going to a client meeting or attending a conference. But they often forget the small ones, like picking up supplies or running to the post office. Individually these are small, but over a year they add up to meaningful miles.

Second, legitimately turn personal drives into business drives. For example, your commute home is not deductible. However, if on your way home you stop at the bank for a business transaction, now that is deductible. 

Third, balance maximizing your deduction with optimizing your time. There are other things you can do to max out this deduction. We’re not covering them here because for most people the amount of money you’ll get is not going to be worth the additional complexity. If you’re comfortable doing your own taxes and you have the time, go ahead and dig deeper

. But if you’re paying someone to do your taxes for you or you have client calls you could be making, move on. 

Closing & Next Steps

To quickly recap, when you use your personal vehicle for work trips:

• Track your milage

• Note the business purpose

• Take the Standard Mileage rate 

• Save money on your taxes!

If you have more questions, we're here to help.