What is the IRS standard mileage rate this year?
The 2025 IRS standard mileage rate for business use is 70 cents per mile, up from 67 cents in 2024. The IRS adjusts this annually based on fuel costs, insurance, depreciation, and general vehicle operating expenses.
To calculate your deduction, multiply the rate by the number of business miles you drove during the year. If you drove 20,000 business miles, that’s a $14,000 deduction. For contractors and trades businesses driving between job sites, supply houses, and client meetings every day, the numbers add up fast.
The standard mileage rate is one of two options. The other is the actual expense method, where you track every cost tied to the vehicle and deduct the business-use percentage. Gas, oil changes, tires, insurance, registration, repairs, and depreciation all get factored in. The actual expense method sometimes produces a larger deduction for heavy-duty trucks and work vehicles that are expensive to maintain. But it requires a lot more recordkeeping.
There’s one important rule about switching between methods. If you use the standard mileage rate in the first year you put a vehicle into business service, you can switch to actual expenses later. But if you start with actual expenses using MACRS depreciation, you’re locked out of the standard mileage rate for that vehicle going forward. Worth thinking about before you commit.
Regardless of which method you choose, the IRS requires a log of your business miles. Each entry needs the date, destination, business purpose, and miles driven. Apps like MileIQ or the QuickBooks mileage tracker handle this automatically. A notebook in the truck works too, as long as you actually fill it out consistently.
Driving between job sites counts as business mileage. Trips to pick up materials count. Meeting a client for an estimate counts. Your commute from home to your regular first stop generally does not count, unless your home office qualifies as your principal place of business.
This is one of the most commonly missed deductions for skilled trades businesses. Thousands of miles driven throughout the year with no log to support the deduction means you’re paying taxes on money you didn’t need to. If your books are already behind or you’re not sure whether you’re capturing mileage properly, contractor bookkeeping services can help you get a system in place so nothing falls through the cracks at tax time.
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More Questions
Can a bookkeeper help me catch up on months of messy records?
Yes. Cleaning up months of backlogged or disorganized books is one of the most common things a bookkeeper does for trade and service businesses. The process involves gathering bank and credit card statements, categorizing every transaction, and reconciling the accounts so your financials are accurate.
Read answerHow do I deal with customers who pay late?
Prevent late payments with clear terms, upfront deposits, and immediate invoicing. When customers do pay late, use aging reports to catch it early and follow a consistent collection process so nothing slips through the cracks.
Read answerWhat tax deductions are available for HVAC contractors?
HVAC contractors can deduct vehicle costs, tools and equipment, refrigerant and parts inventory, EPA certifications, insurance, and more. The key is tracking everything throughout the year so nothing gets missed at tax time.
Read answerWhat records do I need to keep for my contracting business?
Keep income records, expense receipts, job-related documents, payroll files, subcontractor paperwork, and vehicle logs. Most records should be kept for at least three to seven years depending on the type.
Read answerCan I deduct a truck payment as a business expense?
Not exactly. The loan payment itself isn't deductible, but the cost of the truck (through depreciation) and the interest on the loan are. The distinction matters for both your books and your tax return.
Read answerCan I file my business taxes myself or do I need a CPA?
You can legally file your own business taxes. But for most contractors and trades businesses, the complexity of deductions, depreciation, and self-employment tax makes a CPA worth the cost.
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