When reporting car and truck expenses on Schedule C (Form 1040) for 2025, you must choose between deducting actual expenses or using the standard mileage rate. The method you select determines which forms and schedules you must complete and how you report the deduction.
Standard Mileage Rate
For 2025, the standard mileage rate is 70 cents per business mile.
- Multiply business miles driven by the IRS rate to compute the deduction.
- Parking fees and tolls related to business use may be deducted separately.
- If you use the standard mileage rate, you cannot separately deduct depreciation, lease payments, fuel, repairs, insurance, or other actual vehicle expenses.
- The standard mileage rate generally must be used in the first year the vehicle is placed in business use if you intend to use it in later years.
Restriction:
You generally cannot use the standard mileage rate if:
- You claimed depreciation or Section 179 on the vehicle (certain exceptions apply), or
- You used the vehicle under certain non-standard depreciation methods.
Actual Expenses
If you choose the actual expense method, you may deduct the business-use percentage of:
- Gasoline and oil
- Repairs and maintenance
- Insurance
- Tires
- Registration and license fees
- Depreciation (reported separately when applicable)
- Lease or rental payments
Only the portion of expenses attributable to business use is deductible.
Vehicle Leasing Rules
- Lease payments are deductible only under the actual expense method.
- For certain long-term leases, an inclusion amount adjustment may be required (IRS Publication 463 rules).
Recordkeeping Requirements
You must keep detailed records showing:
- Business vs. personal mileage
- Date, destination, and purpose of trips
- Total miles driven for the year
Adequate records are required regardless of the method used
Additional Rules
- If you use five or more vehicles at the same time in your business, you generally cannot use the standard mileage rate.
- Special rules apply to listed property vehicles (including passenger automobiles) under IRS depreciation rules.
- If depreciation is claimed, you may be required to file Form 4562.
- Vehicle expenses must be properly allocated between personal and business use when mixed-use applies.
Reporting
- Car and truck expenses are reported on Schedule C (Form 1040), Part II (Car and truck expenses line).
- Supporting details for vehicle use are provided in Schedule C Part IV when required.
Source:
Schedule C Instructions (2025)
Publication 463: Travel, Gift, and Car Expenses
Disclaimer: Always verify details with the current year’s official IRS forms and instructions from the Federal or State Department of Revenue. For complex situations, consult a CPA or tax attorney.