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Standard mileage rate vs. actual car expenses: which should gig drivers use?
In short: you can deduct car costs with the standard mileage rate (business miles × the IRS rate) or with actual expenses (your real car costs × your business-use percentage). The standard rate is simpler and often works out well for high-mileage drivers in economical cars. Either way, the choice you make in the car’s first business year matters.
Method 1: the standard mileage rate
Multiply your business miles by the IRS rate: 72.5¢ a mile for January 1 to June 30, 2026, 76¢ from July 1 to December 31, 2026, and 70¢ for 2025 (IRS standard mileage rates). Add business tolls and parking. If you’re self-employed, you can also add the business share of car loan interest and personal property tax on the car.
The rate covers gas, oil, repairs, tires, insurance, registration and depreciation, so you can’t deduct those separately (Pub. 463, chapter 4). The records you need are mostly a good mileage log.
Method 2: actual car expenses
Add up what the car really cost you for the year: gas, oil, repairs, tires, insurance, registration, licenses, garage rent, and depreciation or lease payments. Then multiply by your business-use percentage, which is business miles divided by total miles. Pub. 463’s example: 12,000 business miles out of 20,000 total is 60%, so you deduct 60% of those costs. Business tolls and parking are added on top in full (Topic 510).
You need receipts for every cost, plus your total miles for the year, which is where odometer readings help. Depreciation has its own rules. There are yearly dollar limits for cars, and faster depreciation methods require more than 50% business use.
The first-year rule
This rule decides your options for the life of the car, so it’s worth knowing before you file:
- Car you own: to use the standard rate at all, you have to choose it in the first year the car is used for business. In later years you can pick either method each year (IR-2025-128; Topic 510).
- If you start with actual expenses and claim accelerated depreciation (MACRS), a section 179 deduction or bonus depreciation, you can never use the standard rate for that car.
- Switching from standard to actual later is allowed, but you have to depreciate the car with the straight-line method over its remaining useful life.
- Leased car: if you choose the standard rate, you use it for the entire lease, including renewals.
- You make the choice by the due date of your return, including extensions. You can’t use the standard rate if you run five or more cars at the same time.
If you started gig driving in 2026 with a car you already owned, 2026 is that car’s first business year.
Depreciation is built into the standard rate
Part of each standard-rate mile counts as depreciation: 35¢ a mile for 2026 and 33¢ for 2025 (Notice 2026-10). Those amounts lower your car’s tax basis. That matters if you switch to actual expenses later or sell the car.
A side-by-side example
A made-up driver, Jordan, drives 20,000 miles in 2026: 12,000 business (6,000 in each half of the year) and 8,000 personal, so business use is 60%.
| Standard mileage rate | Amount |
|---|---|
| 6,000 miles × $0.725 (Jan.–June) | $4,350 |
| 6,000 miles × $0.76 (July–Dec.) | $4,560 |
| Total | $8,910 |
| Actual expenses (before depreciation) | Amount |
|---|---|
| Gas $2,600 + insurance $1,500 + repairs and maintenance $900 + tires $500 + registration $120 | $5,620 |
| Business share (60%) | $3,372 |
In this example, actual expenses would need more than $5,500 of business-share depreciation to catch up, which is unlikely for an older, paid-off car. A newer, pricier vehicle or one with big repair bills could come out differently. Pub. 463 suggests figuring it both ways if you qualify for both.
Which do gig drivers usually pick?
Many drivers go with the standard rate, mainly because it’s simpler. You don’t need every gas receipt, and high-mileage driving in an economical car tends to favor it. Actual expenses can make sense if your vehicle is expensive to own and run, or if you drive fewer miles for work. Whichever you choose, the mileage log is the same. See what the IRS expects in a mileage log and the 2026 mileage deduction.
Frequently asked questions
Can I switch between the standard rate and actual expenses every year?
For a car you own, yes, if you used the standard rate in the car’s first business year. If you switch to actual expenses later, you have to use straight-line depreciation. If you used actual expenses with accelerated depreciation, section 179 or bonus depreciation in the first year, you can’t switch to the standard rate for that car.
I already owned my car before I started gig driving. Which year is the first year?
It’s the first year the car was available for use in your business, meaning the year you started using it for gig work, not the year you bought it.
Can I deduct gas with the standard mileage rate?
No. The standard rate already covers gas, oil, repairs, insurance and depreciation. You can add business tolls and parking, and if you’re self-employed, the business share of car loan interest and personal property tax.
What if my car is leased?
If you choose the standard mileage rate for a leased car, you have to use it for the entire lease period, including renewals.
Do electric and hybrid cars use the same rate?
Yes. The IRS says the standard mileage rates apply to fully electric and hybrid cars as well as gas and diesel.
General information, not tax advice. Your situation may be different, so check with a tax professional before you file.
Sources
- IRS: Standard mileage rates (all years, including both 2026 rates)
- IRS news release IR-2025-128: 2026 business rate of 72.5 cents (Dec. 29, 2025)
- IRS Internal Revenue Bulletin 2026-29, Announcement 2026-11: 76 cents from July 1, 2026
- IRS Notice 2026-10: 2026 standard mileage rates and depreciation per mile (PDF)
- IRS Publication 463: Travel, Gift, and Car Expenses (chapter 4: transportation and car expenses; chapter 5: recordkeeping)
- IRS Topic no. 510: Business use of car
- IRS: Instructions for Schedule C (Form 1040), line 9 and Part IV
Related guides
Want this tracked for you?
Whichever method you pick, it starts with business miles and total miles. Tap Start when your shift begins, type your odometer when you finish, and Work Well Kept keeps the date, miles and app for you. Miles between shifts are counted as personal unless you mark them Business, and the free reports add up business, personal and total miles for any week, month or year.
It’s free to start, with no credit card.
General information, not tax advice. Tax rules depend on your situation and can change, so check with a tax professional before you file. Work Well Kept isn’t affiliated with the IRS or with DoorDash, Uber Eats, Amazon Flex or any other gig app. See our Disclaimer.