Driving Down Taxes: Auto-Related Deductions for 2025
By Crystal Wilson, Enrolled Agent & Senior Executive Tax Strategist
Crystal Clear Tax – Clearing the Path to Success
Overview
If you use your car for business, some of those miles can actually lower your taxes. The IRS allows you to deduct part of your driving costs, but only if the trips are truly work-related and properly tracked. Done right, this can save you hundreds or even thousands of dollars each year.
What changed under H.R.1 (One Big Beautiful Bill)
The new law did not directly change the car deduction rules, but it did adjust related areas:
- The cap on state and local tax deductions (known as SALT) went up, which may help some taxpayers when itemizing.
- Energy credits for “green” upgrades were reduced, so fewer breaks are available if you install things like electric vehicle chargers.
- Other income-related changes (tips, overtime, student loans) may affect overall taxable income, which can change whether deductions matter more or less.
Two main ways to deduct your car expenses
1. Standard mileage method
This is the simpler option. The IRS sets a flat rate per business mile. For 2025, the rate is 70 cents per mile.
Example: If you drive 5,000 business miles, you can claim $3,500 as a deduction.
This method works best if you drive a lot and your car is inexpensive to maintain.
2. Actual expense method
Here you add up the real costs of running your car, then claim the portion that relates to business use.
This includes:
- Gas, oil, and maintenance
- Insurance and registration fees
- Lease payments or depreciation if you own the car
- Tires, repairs, parking, and tolls
Example: If 60% of your driving is for business, you can deduct 60% of those costs.
This method often works better for people with higher car expenses, like larger vehicles or long commutes between job sites.
What counts as business driving?
- Going to client meetings
- Picking up supplies
- Driving to the airport for a business trip
- Checking on rental properties
- Volunteer driving for a qualified charity (at 14 cents per mile)
- Driving to medical appointments if your medical costs are high enough to claim
What does not count: The drive from home to your regular workplace. That is considered commuting, not business use.
Recordkeeping made simple
The IRS requires proof. You need to keep a log of your miles. Write down:
- The date
- Where you went
- Why the trip was business-related
- How many miles you drove
You can use a phone app, spreadsheet, or notebook. The key is to record as you go, not try to remember months later.
Common mistakes to avoid
- Counting commuting miles as business.
- Claiming 100% business use on a car that is also used for personal errands.
- Forgetting to include parking fees or tolls.
- Throwing away receipts when using the actual expense method.
How Crystal Clear Tax helps
We work with entrepreneurs, freelancers, and small business owners every day who use their vehicles for work. We help you:
- Decide whether mileage or actual expenses gives you the bigger deduction.
- Set up easy systems so tracking your trips is stress-free.
- Avoid red flags that trigger IRS questions.
- Make sure your auto deductions fit into your bigger tax strategy.
Bottom line
Your car does more than get you places. It can also drive down your tax bill if you use it for business and keep good records. The trick is knowing which method to use, tracking correctly, and only claiming what is allowed.
Want to maximize your auto deductions this year? Schedule a consultation with Crystal Clear Tax, and we will help you keep more of what you earn.
Reference: IRS Publication 463, Travel, Gift, and Car Expenses; H.R.1 (119th Congress) summary 【congress.gov†source】
