Standard mileage vs actual expenses.

How the comparison works

Standard method: business miles × the IRS rate for the period they were driven, plus business tolls and parking. The rate is meant to cover the costs of operating the car, including depreciation (Pub. 463), so you do not also deduct gas, insurance or repairs.

Actual method: add up gas and oil, insurance, repairs, depreciation or lease payments and other operating costs, then multiply by your business-use share. Pub. 463 divides car expenses by miles: 12,000 business miles of 20,000 total is 60%. Business tolls and parking are added in full.

Tax saved: the winning deduction × (federal marginal rate + self-employment rate × 92.35%). It is a rough figure: it ignores the half-of-SE-tax deduction, the qualified business income deduction, state tax and phase-outs, and assumes the deduction does not move you into another bracket.

Worked example

6,000 miles each half-year, 18,000 total miles. Standard: 6,000 × $0.725 + 6,000 × $0.76 = $8,910, plus $150 tolls = $9,060. Actual: $3,600 + $1,800 + $1,200 + $3,000 + $300 = $9,900 × 66.7% = $6,600, plus $150 = $6,750. The standard rate wins by $2,310; at 22% plus 15.3% × 92.35% the combined rate is about 36.1%, so it saves about $3,273.

Rules that decide which method you may use

• First-year choice: to use the standard rate on a car you own you must choose it in the first year the car is available for business use. In later years you may use either (Pub. 463, ch. 4).
• Switching to actual: if you used the standard rate in the first year and change to actual expenses later, you cannot use MACRS; you must use straight-line depreciation over the remaining useful life, within the annual limit.
• Standard rate not allowed if you use five or more cars at once, claimed MACRS, a section 179 deduction or the special depreciation allowance on the car, or claimed actual expenses for a leased car after 1997. A leased car using the standard rate must use it for the whole lease.
• Commuting is not deductible: trips between home and your regular or main place of work are personal. Pub. 463 says daily transportation between home and temporary work sites within your metropolitan area is also commuting when you have no regular place of work. If your home is your principal place of business, trips from it to business stops can be deductible. How this applies to a gig driver who has no office is fact-specific; see the sources and ask a tax professional.
• All business miles count, not just delivery miles: the IRS rule is about business use of the car. A platform’s dash-to-drop-off total is a tracking convenience, not the IRS definition, so miles driven between orders while working may also count. You need a record: date, miles, destination and business purpose, kept as you go.
• Depreciation limits: for passenger cars the yearly depreciation deduction is capped and indexed. Use the current limit table in Pub. 463 and Pub. 946 and enter your own figure; this tool does not guess it.