Business Vehicles: Mileage vs. Actual, Buy vs. Lease, and What the Write-Off Really Is

No deduction generates more viral misinformation than the business vehicle. The truth is less cinematic than the videos and still genuinely valuable — if you follow the actual rules.

First principle: only business use deducts

Your deduction equals your business-use percentage of the vehicle, established by a mileage log. Commuting is personal. Errands are personal. The log isn’t optional paperwork — it’s the deduction’s foundation, and reconstructed logs are among the most routinely disallowed records in audits. A $6/month tracking app solves this permanently.

Method 1: Standard mileage

Multiply business miles by the IRS rate (adjusted annually, roughly in the 70-cents range lately). It bundles fuel, maintenance, insurance, and depreciation into one number. Clean, simple, no receipts beyond the log — and often the better deal for efficient vehicles driven many business miles. Choose it the first year the car is in service if you want to preserve the option to switch later; start with actual expenses on an owned vehicle and mileage is off the table for that car.

Method 2: Actual expenses

Deduct the business percentage of everything — fuel, insurance, repairs, registration, lease payments or depreciation. More records, bigger deduction for expensive vehicles with high business use.

Depreciation is where the famous numbers come from. Passenger vehicles face annual “luxury auto” caps that stretch the write-off over years. But vehicles over 6,000 pounds gross vehicle weight escape those caps — heavy SUVs and trucks can be expensed far faster through Section 179 (SUVs have their own dollar limit) and bonus depreciation. This is the kernel of truth inside every “write off your G-Wagon” video. The parts the videos skip: the business-use percentage still applies, business use must exceed 50% to use accelerated methods, dropping below 50% later triggers recapture of the excess depreciation, and the log proves all of it.

Buy vs. lease

Buying offers depreciation (potentially accelerated for heavy vehicles) and suits long holding periods. Leasing deducts the business share of payments — smoother, no recapture drama, but with a “lease inclusion” add-back for pricier vehicles and mileage limits that punish heavy drivers. High-mileage users usually do better owning; image-sensitive, low-mileage, frequent-upgrade users often do better leasing. Run both with your actual numbers.

Who’s deducting, and how

Sole proprietors take it on Schedule C directly. S-corp owners: the clean structure is either a company-owned vehicle (with personal use added to your W-2) or — more commonly — a personally-owned vehicle reimbursed through your accountable plan at the mileage rate. Just deducting your personal car on the corporate return isn’t a method.

The honest summary

A legitimately used business vehicle produces a real, defensible deduction worth thousands a year. The purchase itself is not a tax strategy — spending $80,000 to save $25,000 only wins if the business genuinely needed the $80,000 vehicle. Buy what the work requires; document like it matters; let the math be the math.

Romanchuk CPA LLC is a fully virtual CPA firm serving individuals and business owners nationwide since 2014, with NJ/NY depth. Book a consultation at rfg.tax.

This article is general information, not tax advice for your specific situation. Figures adjust annually — verify current amounts.