Tax Deductions for Self-Employed Drivers in 2025
Knowing the right tax deductions for self-employed drivers 2025 can help you cut costs and increase profits. From mileage and repairs to insurance and depreciation, the IRS allows several write-offs that reward careful tracking and good documentation.
If you’re self-employed and use your vehicle for work, knowing which expenses you can deduct is key to saving money at tax time. The IRS allows several deductions for drivers who use their own cars for business, delivery, or client travel. Understanding these rules for 2025 can help you reduce your taxable income and stay compliant.
1. Mileage Deduction
The simplest option for many drivers is the standard mileage rate. For 2025, the IRS set this rate at 70 cents per mile for business driving, according to IRS Notice 2025-5. This rate covers all vehicle-related costs such as fuel, maintenance, and depreciation.
To qualify, you must keep a detailed mileage log showing the date, purpose, and number of business miles for each trip. The IRS requires accurate records — estimates are not enough.
For the official per-mile deduction figures, see “IRS 2025 Mileage Rates and Vehicle Limits.”
2. Actual Vehicle Expenses
Instead of the standard mileage rate, you can claim your actual car expenses if you prefer. This includes:
- Gas and oil
- Insurance
- Repairs and maintenance
- Car washes and registration fees
- Lease payments or depreciation
If you use your car 80% for business, you can deduct 80% of these costs. While this method can produce a higher deduction, it requires keeping all receipts and careful records.
To decide between deduction methods, read “Standard Mileage vs Actual Expenses 2025.”
3. Depreciation
Depreciation is the gradual loss in value of your vehicle. If you own your car and use it for business, you can deduct part of this cost each year. The 2025 IRS guidance includes a depreciation component of 33 cents per mile when using the standard mileage method. Under the actual expense method, you must calculate depreciation separately according to IRS tables.
4. Parking Fees and Tolls
Even if you use the standard mileage rate, you can still deduct parking fees and tolls related to business travel. Keep receipts or use a digital record to verify these expenses.
5. Other Deductible Expenses
Self-employed drivers may also deduct costs such as a mobile phone plan used for business communication, GPS subscriptions, and vehicle loan interest (proportional to business use). Always document how these expenses relate to your work activity.
For broader rules on what counts as a business expense, check “IRS Business Expense Rules 2025.”
Recordkeeping Tips
Good records are your best defense in case of an IRS audit. Consider using an app or mileage-tracking software that automatically logs business trips and stores receipts. Back up digital copies regularly.
Bottom Line
For self-employed drivers, tax deductions can add up quickly. Whether you choose the standard mileage rate or the actual expense method, make sure to stay consistent and keep your documentation up to date. Review IRS 2025 Mileage Rates and Vehicle Limits for the latest official figures and limits.
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