Mileage Reimbursement Guide 2025: IRS Rates, Calculator & Tax Tips

If you drive for work, you could be missing out on thousands of dollars in legitimate tax deductions. The IRS standard mileage rate for 2025 is $0.70 per mile—up from $0.67 in 2024—representing one of the largest year-over-year increases in recent history.

Whether you're self-employed, an independent contractor, or a small business owner, understanding mileage reimbursement rules can significantly reduce your tax burden. This comprehensive guide covers everything you need to know about the 2025 IRS mileage rate, what qualifies as business mileage, how to calculate your deduction, and best practices for tracking miles that will stand up to IRS scrutiny.

What is Mileage Reimbursement?

Mileage reimbursement is a tax-advantaged way to recover the cost of using your personal vehicle for business purposes. When you drive your own car for work-related activities, you can deduct a standard amount per mile driven, or alternatively, deduct your actual vehicle expenses.

Who Benefits from Mileage Reimbursement:

• Self-employed professionals (consultants, freelancers, contractors)
• Independent contractors (Uber/Lyft drivers, delivery drivers, real estate agents)
• Small business owners who use personal vehicles for business
• W-2 employees (limited—only if your employer offers reimbursement)

Important Distinction: There's a difference between mileage reimbursement and mileage deduction. Reimbursement refers to money an employer pays you back for business miles driven. A mileage deduction is what self-employed individuals claim on their tax return to reduce taxable income. This guide primarily focuses on the deduction side for self-employed professionals and contractors.

For self-employed individuals, claiming business mileage at the 2025 rate of $0.70 per mile can reduce your tax liability significantly. With an effective tax rate of approximately 37% (combining 22% income tax and 15.3% self-employment tax), every $1,000 in mileage deductions saves you about $370 in taxes.

Note: Under the Tax Cuts and Jobs Act (TCJA), W-2 employees can no longer deduct unreimbursed business mileage on their personal tax returns through 2025. However, employers can still reimburse employees tax-free up to the IRS standard mileage rate.

2025 IRS Standard Mileage Rate: $0.70 per Mile

The IRS has set the 2025 standard mileage rate at $0.70 per mile for business use of a vehicle. This represents a $0.03 increase from the 2024 rate of $0.67 per mile and reflects rising costs of vehicle operation, including fuel, maintenance, insurance, and depreciation.

What the Standard Rate Covers:

The $0.70 per mile rate is designed to account for all typical vehicle operating costs, including:

• Gasoline and fuel costs
• Routine maintenance (oil changes, tire rotations, brake pads)
• Vehicle depreciation
• Insurance premiums
• Registration and license fees
• Repairs and unexpected maintenance

Historical Context:

• 2025: $0.70 per mile
• 2024: $0.67 per mile
• 2023: $0.655 per mile
• 2022: $0.625 per mile (mid-year increase from $0.585)

The IRS typically announces mileage rates in December for the following tax year. You can verify the official 2025 rate on the IRS website.

Canadian Rates: For Canadian readers, the CRA automobile allowance rates for 2025 are $0.70 CAD per kilometer for the first 5,000 km driven and $0.64 CAD per kilometer for each additional kilometer.

What Qualifies as Business Mileage?

Understanding what counts as deductible business mileage is critical to maximizing your deduction while staying compliant with IRS rules. The key principle: miles must be driven for legitimate business purposes.

Eligible Business Miles:

✅ Client meetings and site visits – Driving to meet clients, inspect properties, or visit job sites

✅ Business errands – Trips to the bank for business deposits, office supply stores, or shipping centers

✅ Temporary work locations – Travel to temporary job sites or project locations

✅ Business-related networking – Driving to conferences, trade shows, or professional networking events

✅ Multi-stop business trips – Consecutive business stops in a single day

✅ Travel between job sites – Moving between multiple work locations in one day

Non-Deductible Miles:

❌ Commuting – Regular travel between home and your primary workplace is never deductible

❌ Personal errands – Grocery shopping, gym visits, or personal appointments

❌ Mixed-purpose trips – Only the business portion of a trip that combines business and personal stops is deductible

Profession-Specific Examples:

Real Estate Agents: Driving from your home office to show properties, attend open houses, or meet clients at listings qualifies. Your morning drive from home to your real estate office does not.

Contractors: Travel from your shop/office to client job sites is deductible. If you work from home and drive directly to job sites, those miles typically qualify as business miles rather than commuting.

Sales Representatives: Visiting customer locations, delivering samples, or attending trade shows qualifies. Daily travel to a regional office does not.

Consultants: Driving to client offices, co-working spaces for client meetings, or temporary project sites qualifies.

The Home Office Exception:

If you have a qualified home office that serves as your principal place of business, trips from your home to client locations or business errands are generally deductible. This is a significant advantage for self-employed professionals—your first mile becomes deductible rather than counting as a commute.

Temporary vs. Regular Workplace:

The IRS distinguishes between temporary and regular work locations. Travel to a temporary work location (expected to last one year or less) is deductible. Travel to a regular work location where you expect to work indefinitely is considered commuting.

Ready to calculate your potential deduction? Use our free mileage calculator to see how much you could save with the 2025 rate.

How to Calculate Mileage Reimbursement

Calculating your mileage deduction is straightforward with the IRS standard mileage rate method. Here's the simple formula:

Total Deduction = Business Miles Driven × $0.70

Example Calculation:

If you drove 15,000 business miles in 2025:

15,000 miles × $0.70 = $10,500 deduction

At a 37% effective tax rate (self-employed), this saves you approximately $3,885 in taxes.

Per-Trip Calculation:

For individual trips, multiply the miles by $0.70:

• 50-mile client visit: 50 × $0.70 = $35 deduction
• 200-mile conference trip: 200 × $0.70 = $140 deduction
• 10-mile business errand: 10 × $0.70 = $7 deduction

Annual Projection:

Not sure how many miles you'll drive this year? Track your business mileage for one typical month, then multiply by 12 for an annual estimate. Most self-employed professionals drive between 8,000 and 20,000 business miles annually.

Use our free mileage calculator to instantly calculate your deduction for any number of miles at the current 2025 IRS rate. The calculator also shows your estimated tax savings based on your tax bracket.

Standard Mileage vs. Actual Expense Method:

While most people use the standard mileage rate method ($0.70/mile), you can alternatively deduct actual vehicle expenses. This includes gas, oil, repairs, insurance, depreciation, lease payments, registration, and licenses. You must keep detailed receipts and can only deduct the business-use percentage of these expenses.

The standard mileage rate is almost always simpler and often more beneficial unless you drive a luxury vehicle with high operating costs. Once you choose a method for a vehicle, you must continue using that method for the life of that vehicle (with some exceptions).

Common Mileage Tracking Mistakes to Avoid

Even with the best intentions, many self-employed professionals make costly mistakes that can reduce their deduction or trigger IRS scrutiny. Here are the most common pitfalls and how to avoid them:

1. Not Tracking Mileage at All

The biggest mistake is failing to track business miles throughout the year. Without contemporaneous records, you may forget trips or lack documentation if audited. Don't wait until tax season—track as you go.

2. Insufficient Documentation

Simply recording "200 miles" isn't enough. The IRS requires:

• Date of each trip
• Starting location and destination
• Business purpose (client name, meeting purpose)
• Miles driven

A mileage log that says "Client meeting - 40 miles" won't hold up under audit. "Meeting with Sarah Johnson at 123 Oak St to review Q1 marketing strategy - 40 miles" will.

3. Claiming Commuting Miles

This is the most common error that triggers audits. Your daily drive from home to your regular office or shop is never deductible, even if you stop for coffee or make a business call during the drive. Only claim miles that meet the IRS definition of business travel.

4. Mixing Personal and Business Use Incorrectly

If you use one vehicle for both business and personal driving, you can only deduct the business percentage. Don't round up or estimate—track both types of miles accurately. Some people accidentally claim 100% of vehicle use as business when it's actually 60% business and 40% personal.

5. Using Outdated Rates

Each year brings a new IRS mileage rate. Make sure you're using $0.70 for 2025, not the 2024 rate of $0.67. While it seems like a small difference, it adds up: on 10,000 miles, using the old rate costs you $300 in deductions.

6. Forgetting to Track Small Trips

That 5-mile trip to the office supply store counts. Those 8 miles to deposit a business check matter. Small trips add up significantly over a year—don't dismiss them as "not worth tracking."

7. Lack of Supporting Documentation

Beyond your mileage log, keep supporting documents like meeting confirmations, client emails, calendar entries, and receipts from business destinations. These corroborate your mileage claims if questioned.

8. Reconstructing Logs from Memory

Creating a mileage log at year-end based on memory or appointment calendars is risky. The IRS requires "contemporaneous" records—meaning created at or near the time of the trip. If you've fallen behind, use calendar entries and receipts to reconstruct what you can, but commit to real-time tracking going forward.

Best Practices for Tracking Business Miles

Proper mileage tracking protects your deduction and ensures IRS compliance. Follow these best practices to maintain audit-proof records while minimizing the time burden:

1. Keep a Detailed Mileage Log

Your log should include five essential elements for every business trip:

• Date of the trip
• Starting location and destination address
• Business purpose (specific client name, meeting topic, or errand purpose)
• Odometer readings (start and end) or total miles
• Route taken (optional but helpful for longer trips)

Template: "1/15/2025 | Home office to Johnson Construction, 456 Industrial Blvd | Proposal meeting for Q2 renovation project | 38 miles"

2. Use Mileage Tracking Apps or GPS Tools

Modern technology makes tracking nearly effortless:

• Automatic GPS tracking apps record trips without manual entry
• MileIQ, Everlance, Stride are popular options for W-2 employees and contractors
• QuickBooks Self-Employed integrates with accounting
• Fiscura mobile app offers GPS-powered automatic mileage tracking specifically designed for self-employed professionals and contractors

Many apps use GPS to automatically detect trips, requiring you only to swipe to categorize as business or personal. This creates contemporaneous, location-verified records that satisfy IRS requirements.

3. Separate Business and Personal Vehicles

If possible, designate one vehicle exclusively for business use. This simplifies tracking dramatically—every mile becomes deductible, eliminating the need to separate business and personal use. You can deduct 100% of vehicle expenses or use the standard mileage rate on all miles driven.

For most people, this isn't practical, but if you're a contractor with a work truck and a personal car, keeping them separate streamlines record-keeping.

4. Take Photos of Odometer Readings

At minimum, photograph your odometer on January 1 and December 31 each year. This establishes your total annual mileage, which helps verify the accuracy of your business mileage percentage. Some professionals also photograph the odometer at the start and end of long business trips.

5. Save Supporting Documents

Maintain a folder (physical or digital) with documents that support your mileage claims:

• Client meeting confirmations and emails
• Calendar entries showing appointments
• Receipts from business destinations (parking, tolls, conference registration)
• Google Maps or GPS route confirmations for unusual trips

These documents corroborate your mileage log if the IRS ever questions specific trips.

6. Review and Reconcile Monthly

Don't wait until tax season. Review your mileage log monthly to:

• Catch any missed trips while they're fresh in your memory
• Verify that business purposes are clearly documented
• Ensure your tracking app or method is working properly
• Calculate your running deduction total

Monthly reviews take 15-30 minutes but prevent year-end scrambles and gaps in your records.

7. Document Your Methodology

Write a brief note explaining your tracking system and keep it with your tax records. "I use the Fiscura mobile app for automatic GPS tracking. All trips are categorized as business or personal at the time of occurrence. Supporting documentation is stored in my Google Drive folder 'Mileage 2025.'"

This helps your tax preparer and provides clarity if you're ever audited.

Track mileage automatically with Fiscura's GPS-powered mobile app, designed specifically for self-employed professionals, contractors, and small business owners. Fiscura runs in the background, automatically detects trips, and lets you categorize them with a single swipe. Your mileage log is always up-to-date and IRS-compliant—no manual entry required. Plus, capture receipt photos on the go and let AI handle the data entry. Sign up for early access to Fiscura!

Calculate your 2025 mileage deduction now with our free calculator using the latest IRS rate.

Frequently Asked Questions

Do I need receipts for mileage deduction?

No, you don't need gas receipts or other vehicle expense receipts if you use the standard mileage rate method ($0.70 per mile for 2025). The standard rate is designed to cover all operating costs, so the IRS only requires a detailed mileage log showing dates, destinations, business purposes, and miles driven.

However, you do need receipts for expenses outside the standard rate, such as:

• Parking fees at business locations
• Tolls for business trips
• Business-related car washes
• Vehicle registration fees (if you use the actual expense method)

If you choose the actual expense method instead of the standard mileage rate, you must keep all vehicle-related receipts (gas, repairs, insurance, etc.) and can only deduct the business-use percentage.

Bottom line: Standard mileage rate = no fuel receipts needed, but keep a detailed mileage log. Actual expense method = keep every vehicle-related receipt.

Can I deduct commuting miles?

No, commuting miles are never deductible. The IRS defines commuting as travel between your home and your regular place of business. This applies whether you're self-employed or a W-2 employee.

However, there are important exceptions:

1. Home office: If you have a qualified home office that serves as your principal place of business, trips from home to client sites, meetings, or business errands are generally deductible—they're not considered commuting.

2. Temporary work location: Travel to a temporary work location (expected to last one year or less) is deductible, even if you have a regular office elsewhere.

3. Multiple work locations: Travel between job sites during a workday is deductible. For example, if you drive from your office to a client site and then to another client site, those miles qualify.

Example: A consultant who works from a home office can deduct miles driven to client locations, co-working spaces for meetings, or business errands. A consultant who rents an office space cannot deduct the drive from home to that office, but can deduct trips from the office to client sites.

What's the difference between actual expense vs standard rate?

These are the two IRS-approved methods for deducting vehicle expenses:

Standard Mileage Rate ($0.70/mile in 2025):

• Multiply business miles by the standard rate
• Covers gas, maintenance, depreciation, insurance, registration
• Simpler—only requires a mileage log
• Better for most people, especially with older or fuel-efficient vehicles
• Can still deduct parking and tolls separately

Actual Expense Method:

• Deduct actual costs: gas, oil, repairs, insurance, depreciation, lease payments, registration, licenses
• Must keep all receipts and detailed records
• Deduct only the business-use percentage (if vehicle is used for personal driving too)
• More complex but potentially better for luxury vehicles, electric cars, or very low-mileage years
• Must use this method for the vehicle's lifetime once chosen (with limited exceptions)

Which should you choose? Most self-employed professionals benefit more from the standard mileage rate due to its simplicity. Use actual expenses only if you drive an expensive vehicle with high operating costs or have unusually high repair expenses in a given year.

Important: You must choose your method in the first year you use the vehicle for business. If you want flexibility to switch between methods in future years, you must start with the standard mileage rate—you can't switch to standard mileage after using actual expenses.

How do I track mileage for taxes?

The IRS requires "contemporaneous" records—meaning you should track mileage at or near the time trips occur. Here's the most effective approach:

Required Information for Each Trip:

1. Date of travel
2. Starting point and destination
3. Business purpose (client name, meeting subject)
4. Miles driven or odometer readings

Best Tracking Methods:

Option 1: Automatic GPS App (Recommended)
Use a mileage tracking app like MileIQ, Everlance, Stride, or Fiscura. These apps automatically detect trips using your phone's GPS, require only a swipe to categorize as business/personal, and generate IRS-compliant reports.

Option 2: Manual Logbook
Keep a physical notebook in your vehicle and log each trip immediately. While old-fashioned, this method creates contemporaneous records that satisfy IRS requirements.

Option 3: Spreadsheet or App with Manual Entry
Log trips in a spreadsheet or notes app after each trip or at the end of each day. Include all required elements and be consistent.

Additional Best Practices:

• Take photos of your odometer on January 1 and December 31
• Keep supporting documents (meeting confirmations, calendar entries)
• Review your log monthly to catch any gaps
• Save parking and toll receipts from business trips
• Document your tracking method in writing

What if I'm audited? The IRS can disallow your entire mileage deduction if you lack adequate records. A detailed, contemporaneous mileage log is your best protection. Generic estimates or reconstructed logs from memory typically won't hold up under scrutiny.

The easiest solution: Track mileage automatically with Fiscura's GPS-powered mobile app. Fiscura creates audit-proof records with zero manual entry, automatically categorizes trips, and generates tax-ready reports. Perfect for self-employed professionals who want maximum deductions with minimum hassle.

Start Maximizing Your Mileage Deduction Today

The 2025 IRS mileage rate of $0.70 per mile represents a significant opportunity for self-employed professionals and contractors to reduce their tax burden. With proper tracking and documentation, you can claim every legitimate business mile and keep more of your hard-earned income.

Key Takeaways:

• Use the $0.70 per mile rate for all 2025 business miles
• Track mileage contemporaneously with dates, destinations, purposes, and miles
• Avoid common mistakes like claiming commuting miles or using outdated rates
• Use GPS tracking apps for effortless, audit-proof records
• Review your mileage log monthly to catch gaps

Ready to see how much you could save? Use our free mileage calculator to calculate your 2025 deduction in seconds.

Track mileage automatically with Fiscura's GPS-powered mobile app—designed for self-employed professionals who want maximum tax deductions without the manual work. Fiscura runs in the background, automatically detects trips, and creates IRS-compliant mileage logs with zero effort on your part. Plus, capture receipt photos on the go and let AI handle the data entry.

Disclaimer: This article provides general tax information and should not be considered professional tax advice. Consult with a qualified tax professional or CPA for guidance specific to your situation.