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Standard Mileage vs. Actual Expenses: Which Car Deduction Is Better for Drivers?
The short answer: for most delivery and rideshare drivers who drive a lot in an affordable, fuel-efficient car, the standard mileage rate (72.5¢ a mile) usually wins. Actual expenses can win for expensive or costly-to-run cars. For a car you own, you generally must use standard mileage in the first year to keep it as an option later.
The two methods side by side
| Standard mileage | Actual expenses | |
|---|---|---|
| Deduction | 72.5¢ × business miles (2026) | Business-use % × all car costs |
| Includes | Gas, repairs, tires, insurance, depreciation | The same, using your real costs |
| Also deductible | Business parking and tolls | Business parking and tolls |
| Records | Mileage log | Mileage log plus every receipt |
| Usually better for | High mileage, efficient or older cars | Expensive cars, high costs, lower mileage |
Worked example
A driver puts 18,000 miles a year on their car, 12,000 of them for gig work (67%). Total car costs are about $9,200 a year, including gas, repairs, tires, insurance, registration and $3,000 of depreciation.
- Standard mileage: 12,000 × $0.725 = $8,700
- Actual expenses: 67% × $9,200 ≈ $6,200
Standard mileage deducts about $2,500 more. Run your own numbers in the standard vs. actual calculator.
Rules that lock in your choice
- First year matters. For a car you own, you must choose the standard rate in the first year the car is used for business if you want to use it at all. Later you can switch between methods (IRS Topic 510).
- Switching to actual later means using straight-line depreciation for the rest of the car's useful life.
- Starting with actual expenses and accelerated depreciation generally means you can't use standard mileage for that car later.
- Leased cars that use the standard rate must keep it for the whole lease.
Depreciation rules are complex, so confirm your choice with a tax professional, especially for a new or expensive car. For more on mileage records, see the mileage deduction guide.
FAQ
Is standard mileage or actual expenses better for Uber drivers?
For most high-mileage drivers in affordable, efficient cars, the standard rate is bigger and simpler. Expensive or costly cars can favor actual expenses.
Can I switch from actual expenses to standard mileage?
Generally only if you used the standard rate in the first year the car was used for business. If you started with actual expenses and accelerated depreciation, you usually can't switch.
Can I deduct parking and tolls with the standard mileage rate?
Yes. Business parking fees and tolls are deductible under either method.
Sources: IRS Topic 510 · IRS 2026 mileage rate · IRS Publication 463. General information for planning, not tax, legal or financial advice. Rules have exceptions; check with a tax professional for your situation.