The IRS has announced the new standard mileage rate for business use of a vehicle in 2025: $0.70 per mile. That’s an increase from the 2024 rate, reflecting inflation and rising vehicle-related costs. For small business owners, freelancers, and anyone who uses their personal vehicle for work-related tasks, this change is more than just a number—it’s a chance to optimize your tax deductions.
Why Mileage Tracking Matters
Tracking your business mileage isn’t just a good habit—it can save you serious money at tax time. For every mile you drive for business purposes, you can deduct $0.70 from your taxable income. That means if you drive 10,000 miles for business in 2025, you could claim a $7,000 deduction.
Missed miles are missed dollars. If you’re not keeping an accurate log, you’re essentially leaving money on the table. Worse, if you’re ever audited and don’t have proper documentation, the IRS could disallow your entire mileage deduction.
What Qualifies as Business Mileage?
Not every mile you drive qualifies. Here’s what does count:
- Traveling between job sites or client meetings
- Driving to a temporary work location
- Running errands directly related to your business (e.g., picking up supplies)
- Traveling to the airport for a business trip
What doesn’t count:
- Commuting from home to your regular office
- Personal errands or travel
How to Track Your Business Miles
Tracking business mileage has never been easier, thanks to modern tools. Here are a few reliable methods:
- Use a Mileage Tracking App
Apps like MileIQ, Everlance, and Hurdlr make mileage tracking effortless. These apps run in the background and automatically log your drives. You can then categorize trips with a simple swipe. Most apps generate IRS-compliant reports you can share directly with your accountant.
- Keep a Manual Logbook
If you’re a pen and paper-type business traveler, you can keep a physical mileage logbook in your glove compartment. Record the following details for each trip:
- Date
- Starting point and destination
- Purpose of the trip
- Starting and ending odometer reading
The IRS requires “contemporaneous” records, meaning you should record the trip close to when it happens—not all at once months later.
- Use a Spreadsheet
Some prefer a digital DIY approach. A Google Sheet or Excel spreadsheet can do the trick, but you’ll need to be disciplined. Be sure to include all the same details as a manual log and update it regularly.
How to Report Business Mileage to Your Accountant
When tax time comes around, your accountant will need the total number of business miles you drove during the year—along with documentation to support the deduction.
Here’s how to make it easier for both of you:
- Summarize Monthly Totals: If you’ve tracked your mileage throughout the year, provide a monthly breakdown. Most apps can generate this automatically.
- Include Supporting Logs: Whether it’s a digital report, a spreadsheet, or scanned logbook pages, make sure your records are organized and clearly labeled.
- Separate Personal and Business Use: If you use the same vehicle for both personal and business driving, you must only report business miles. Note the total miles driven for the year as well, since the IRS may require this figure.
- Share Receipts When Relevant: Use of the standard mileage rates is optional. Taxpayers may instead choose to calculate the actual costs of using their vehicle. If you’ve chosen this method instead of the standard mileage rate, you’ll need to provide fuel, maintenance, insurance, and depreciation records instead of mileage logs.
Final Thoughts
With the new 2025 mileage rate set at $0.70, it’s more important than ever to diligently track your business driving. Doing so can lead to significant tax savings and reduce stress during tax season. Whether you go digital or manual, the key is consistency and accuracy. Make mileage tracking a part of your business routine, and your accountant—and your wallet—will thank you.
