Contractor Mileage Deduction: What to Record and What the Deduction Is Worth

This article illustrates the standard mileage calculation for deductible self-employed business mileage. The same IRS rate can also be used in qualifying employee reimbursement arrangements under an accountable plan.

If you operate through a corporation and are an employee of it, the reporting mechanics are different. The IRS generally treats corporate officers who provide services as employees, and unreimbursed employee mileage is generally not a personal federal deduction. On officer employment status see S corporation employees, shareholders and corporate officers; on the reimbursement and unreimbursed-expense rules see Publication 463.

2026 carries two business rates. Your log has a line in the middle of it, and the halves are calculated separately.

Classify the trip before calculating its deduction.

Ordinary commuting is generally not deductible. Travel between your home and a regular workplace is ordinarily commuting unless an exception applies; distance alone does not change that result. See Publication 463.

Home-to-jobsite travel needs a separate eligibility check. A qualifying principal-place-of-business home office can make these trips deductible. Temporary-work-location exceptions can also apply without one. "Temporary" has a specific tax meaning; a remodeling job being finite does not by itself make every home-to-jobsite trip deductible. Where you have one or more regular work locations away from home, travel from home to a temporary location in the same trade or business can qualify; with no regular work location and no qualifying home office the rule is more restrictive.

Count each eligible trip segment once. In the scenario below, supplier trips and estimate visits are separate travel, not miles already counted in another row.

This article does not establish an average for contractors. It uses an explicit scenario you can replace with your own records. Your mileage will depend on geography, supplier distance, scheduling and lead volume.

The three answers are different and they are commonly confused.

The deduction. In this eligible, substantiated, evenly split scenario, the deduction is $4,455.00. That is the amount that reduces taxable income.

The tax effect is not $4,455.00. At a hypothetical 25% federal income-tax rate, $4,455.00 x 25% = $1,113.75, as a simple income-tax illustration only. That is not a prediction of total tax savings: self-employment tax, QBI, state taxes and other interactions can change the result.

The potential deduction omitted. Suppose 1,000 otherwise eligible business miles are left out, with 500 in each rate period. Those miles represent a potential $742.50 deduction, not $742.50 of tax savings. Missing log entries do not by themselves establish that a deduction is permanently lost; whether other evidence supports the claim is a separate question.

Here is an illustrative entry for a supplier trip.

A total at year end is not a mileage record.

For each business use, keep the date, the business miles, the destination and the business purpose. Separately, retain the vehicle-level information your tax records need, including total annual mileage and, where applicable, when the vehicle began business use and its cost and basis information. The substantiation table in Publication 463 sets out both.