It depends on how your vehicle costs compare to how many business miles you drive — and the only reliable way to know is to compute both methods and take the higher deduction. As a rule of thumb, a high-mileage, inexpensive car usually wins with standard mileage, while an expensive car driven modest miles (especially in year one, with depreciation) often wins with actual expenses. But the two are frequently close, so run the numbers before you decide.
How each method works
Standard mileage (US): multiply your business miles by the IRS standard mileage rate — 72.5¢ per mile for 2026 (the IRS sets this each year, so confirm the current rate). You can still add parking, tolls, and, if you own the vehicle, business-use-percentage loan interest on top.
Actual expenses (US): add up everything you spent on the vehicle for the year — gas, maintenance, insurance, registration, lease payments or loan interest, depreciation — multiply by your business-use percentage (business miles ÷ total miles), then add parking and tolls at 100%.
Canada: the parallel choice is the CRA's reasonable per-kilometre rates (73¢/km for the first 5,000 km and 67¢/km after that in 2026, plus a 4¢/km bump in the territories — rates set annually) versus tracking actual vehicle costs × business-use percentage. Vehicle costs flow to T2125 line 9281; in the US the deduction lands on Schedule C line 9.
The catch people miss: switching restrictions (US)
Per IRS Pub 463, the method you pick the first year the vehicle is in service limits your options later:
- Choose standard mileage in year one, and you can switch to actual expenses in a later year (with limits on the depreciation method).
- Choose actual expenses in year one, and you're locked into actual expenses for the life of that vehicle — no going back to standard mileage.
So if the two methods are close in year one, standard mileage preserves your flexibility. Canada has no equivalent lock-in — you can re-choose each year.
The unique proof: ExpenseBot computes both for you
Most expense tools track your spending; ExpenseBot's Vehicle Deduction Optimizer actually runs both methods on your real tracked data and tells you which one gives the bigger deduction. It reads your mileage log plus every vehicle-tagged expense, computes standard mileage and actual expenses side by side, and drops the winning figure onto Schedule C line 9 (US) or T2125 line 9281 (Canada) — along with an IRS Pub 463-style audit-ready mileage log. It even flags the year-one lock-in and sub-50%-business-use warnings.
No other expense tracker markets this both-methods computation. See the Vehicle Deduction Optimizer report, the mileage tracker, and the mileage calculator. Rideshare and delivery drivers can also read the Uber driver tax tracker and DoorDash driver tax tracker guides.
Quick answers
Can I switch from standard mileage to actual? In the US, yes if you started with standard mileage (with depreciation limits). If you started with actual expenses, you're locked into that method for the vehicle. Canada lets you re-choose yearly.
What does the standard mileage rate include? Gas, maintenance, insurance, registration, and depreciation — all bundled into the per-mile rate. You add parking, tolls, and (if you own) business-use loan interest separately. You do not also deduct gas or repairs on top.
Do I still need receipts with standard mileage? You don't need fuel/repair receipts, but you must keep a mileage log (dates, miles, business purpose) and receipts for parking and tolls, which are deductible on top.
Educational tax information, not tax advice. Confirm the current-year rates and the best method for your situation with the IRS, the CRA, or your tax professional.