How to Compute Your Vehicle Expenses

If you use your vehicle for business driving, there are two methods that can be used to compute your vehicle expense deduction:

Ideally, each year you (or your accountant) should compute your deduction under both the standard mileage rate and the actual cost methods, and compare the results. Then, use the method that gives you the largest deduction in that particular year.


Remember that whichever method you choose, you may have a taxable gain when you sell or otherwise dispose of a vehicle used in your business.