But because consistently and accurately tracking miles can feel like a chore, some people opt out of tracking their mileage—but those people also don't get the full benefit of their deductions.
The good news? Tracking your miles doesn't have to be a chore. In fact, if you know what to do, the process can be quick, easy, and painless—and you won't have to sacrifice any deductions come tax season.
Let's take a look at everything you need to know about tracking business mileage. By the end of this guide, you'll be armed with the information you need to create an affordable and reliable system for recording your mileage throughout the year.
Ready? Let's get tracking.
What Counts as Business Mileage?
Business mileage is any distance you drive for business purposes, like traveling for client meetings, supplier visits and deliveries. Commuting and going to leisure activities don't count. Here's a larger list so you can make sure you're tracking your miles correctly.
Examples of Business Mileage
- Having a business lunch or dinner with clients
- Driving to meet with clients or customers
- Attending business meetings or conferences
- Visiting the post office, bank, or stores like Home Depot for work-related supplies
- Traveling for medical appointments directly related to work
- Running errands directly related to business operations
Examples of Personal Mileage
You can't deduct personal miles from your taxes. Personal miles include things like:
- Commuting between home and work
- Engaging in sports activities for personal fitness and enjoyment
- Personal shopping trips unrelated to business needs
- Traveling to attend events or gatherings not related to work
- Driving to entertainment venues for personal reasons
You can check out IRS Publication 463 for more specifics on what counts as business mileage.
How to Keep a Mileage Log
A mileage log is necessary for anyone who wants to deduct vehicle expenses on their taxes. There are two primary methods for claiming vehicle expenses:
- Standard mileage rate: You deduct a flat rate per business mile driven as set by the IRS. For 2023, that's 65.5 cents per mile. This rate is meant to cover everything from gas to maintenance to depreciation. This is a simple way to get the deduction and is often preferred for its ease of use.
- Actual expense method: You deduct the maintenance, insurance, depreciation, and fuel costs for your vehicle. This is the most accurate way to claim your deduction and is sometimes more advantageous than the standard deduction if you have a pricier vehicle.
Standard Mileage vs. Actual Expense: Which Method is Best?
Standard mileage is typically better for those who don't want to spend a lot of time tracking every little car expense. And, if you have a newer car that's fuel-efficient, the standard mileage rate might even give you a better deduction than if you tallied up all your actual expenses. It's a great fit for those who want to save both time and money and whose driving-related expenses are relatively low.
The actual expense method can be better for those who spend a lot on their vehicles. Maybe you drive a luxury car with expensive parts, your vehicle is older and requires frequent repairs, has high insurance premiums, or doesn't get good gas mileage. Those costs can add up quickly and tracking them might result in a larger deduction.
However, it's worth mentioning that this method requires more diligent record-keeping. You'll need to save all the receipts and track every expense. This can be time-consuming but could pay off if your expenses are high.
How to Track Mileage using Standard Mileage Rate
To comply with the IRS's rules, you'll need to track four pieces of information about every business trip:
- Date and time: The first thing to track is the date of the drive and the time the trip took place. If you want to be thorough, you can also track the start and end times of the journey.
- Number of miles driven: Most people record the beginning and ending odometer readings. But this is not required by the IRS. Instead, you'll just need to include the odometer readings at the start and end of the year. However, you are required to differentiate between miles used for business and personal reasons—so if you're not driving your car for business purposes all the time, it's best to record the mileage for every trip to be super safe.
- Destination: The place you drive to—AKA your destination—will help identify the trip as one for business use.
- Business purpose: Here is where you can (and should!) get into the details. You don't have to write a novel, but the more details, the better. At the very least, make sure to outline the person you went to see and the reason for the trip.
It's also a great idea (though not required) to keep supporting documentation of your trips whenever possible. This includes:
- Receipts
- Invoices
- Appointment schedules
- Other supporting documents
This information can act as your iron-clad defense in the event of an audit.
Come tax time, you'll add your total miles (or your software will do it for you), multiply it by the standard mileage rate, and add that deduction to your tax paperwork.
If you track business miles, you can earn significant tax savings at the end of the year—but only if you're tracking those miles correctly. Whether you use the standard mileage rate or actual expense method for your business mileage deduction, the IRS wants you to keep detailed records of your business trips—including logging your miles.
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Sample Calculation using the Standard Mileage Rate
Imagine you're a plumber running your own business. Your vehicle is crucial to your work as you use it to visit clients, supply stores, and various job sites. The vehicle is used for both personal and business purposes, and you've decided to calculate your deduction using the standard mileage rate.
You've been good about keeping a logbook in your vehicle and noting down each business-related trip:
- February 12: Client's House for a Repair Job, 35 miles
- February 20: Plumbing Supply Store, 15 miles
- March 5: Consultation at a New Construction Site, 40 miles
- ...
By the end of the year, you find that you've driven a total of 3,000 business-related miles.
Using the standard mileage rate of 65.5 cents per mile, you can calculate your deduction as follows:
3,000 miles x $0.655 per mile = $1,965
So, in this example, as a plumber, your deduction for vehicle expenses using the standard mileage rate method would be $1,965.
How to Use the Actual Expense Method
Here's how you can keep track of mileage and other relevant information for the actual expense method:
- Keep detailed records: For the actual expense method, it's important to keep detailed records of all your vehicle-related expenses, including gas, repairs, maintenance, insurance, and depreciation. This will usually require saving all related receipts and documenting each expense.
- Track business vs. personal use: While you don't need to calculate a rate per mile as you do with the standard mileage rate, you still need to track the portion of your vehicle's use that's for business versus personal. This will include keeping track of the miles driven for each.
- Use a mileage log: Even though you're not calculating a deduction based on mileage, a mileage log can still be incredibly helpful. You can keep a notebook in your car or use a mobile app designed for this purpose. Record the date, miles driven, destination, and purpose for each business-related trip. This log will help you demonstrate the business use of your vehicle if you ever need to.
- Calculate the business percentage: At the end of the year, you'll need to calculate the percentage of the vehicle's use that was for business. You'll apply this percentage to your total vehicle expenses to determine your deduction. This is where your mileage log can come into play, helping you accurately determine this percentage.
Sample Calculation using Actual Expense Method
Let's assume that you drove 20,000 miles for the year, 12,000 of which were for business purposes. We'll also assume that you're self-employed as a landscaping contractor and use your vehicle to visit job sites, purchase supplies, and meet with clients.
Here's a breakdown of your vehicle expenses for the year:
- Gas: $3,000
- Maintenance and repairs: $1,000
- Insurance: $1,200
- Depreciation: $2,500
Total expenses: $7,700
To calculate your deduction using the actual expense method, you first need to determine the percentage of the vehicle's use that was for business. In this case, that's 12,000 business miles out of a total of 20,000 miles, or 60%.
Now, you simply multiply your total expenses by the percentage of business use:
$7,700 (total expenses) x 60% (business use) = $4,620
So, in this example, your deduction for vehicle expenses using the actual expense method would be $4,620.
Track Each Trip in Real-Time—and Audit Your Trips Often
One tip to keep in mind? Track each trip as you make it. Keeping up-to-date records helps you accurately claim your miles at the end of the year and stay out of trouble in the event of an audit.
You'll also want to review and reconcile your log often—once a week or once a month, depending on the frequency of business trips.
This is to ensure the accuracy of your records and to reduce stress at tax time. When you have clean financial records to work from, claiming your mileage is much easier.
The Best Tools for Tracking Business Mileage
There's no one-size-fits-all solution for tracking business miles; the best approach will depend on a variety of factors, including the size of your business, your budget, and your personal preferences.
Not sure what tool is right for your business? Let's take a look at three of the most commonly recommended strategies for tracking business miles:
Mileage Tracker Apps
Using a mileage tracking app is a popular (and convenient!) option for tracking business miles. These apps are designed specifically for mileage tracking and offer features like automatic trip detection, GPS tracking, and detailed reporting.
Many apps allow you to categorize trips as business or personal, record trip details, and generate reports for expense reimbursement or tax purposes. Apps serve a wide range of users, from small business owners to independent contractors.
Pros:
- Save time and reduce manual entry errors.
- Get accurate and automatic mileage records.
- Generate reports and share them easily.
Cons:
- Compatible mobile devices are required.
- Subscription fees and additional charges are expensive.
- Reinvestment in newer mobile devices may be needed sooner.
GPS-Enabled Mileage Tracking Devices
Looking for a phone-free solution? There are GPS-enabled devices designed specifically for mileage tracking—no phone necessary.
Generally, these devices are either plugged into the vehicle's OBD-II port or connected wirelessly—and once they're connected, they capture mileage data automatically, track and record the distance traveled, and eliminate manual entry.
Pros:
- You can track miles automatically.
- You reduce the chances of human error.
- It's great for businesses with larger vehicle fleets.
Cons:
- You'll spend a lot upfront to cover the cost of the devices.
- You need to ensure the devices are compatible with your vehicle's make and model or invest in compatible vehicles.
- You'll spend significant time evaluating your options.
Manual Mileage Logs
Though a bit old school, manual mileage logs can still be effective—especially if you're self-employed and don't have a ton of mileage to track. As the name suggests, with this method, you manually record trip details—either in a physical logbook or spreadsheet (like Excel or Google Sheets).
Pros:
- No cost.
- You can easily customize your record logs to fit your needs.
- It's great for businesses with low mileage tracking.
Cons:
- Your records are more prone to human error.
- You'll spend more time keeping your records updated.
- You'll need to make backups of your hard copies.
Ultimately, the best strategy for keeping track of mileage depends on your needs and preferences. To determine which tracking method is right for you, make sure to consider all the factors involved—like the volume of business miles, how automated you want (or need) the process to be, and your budget.
Manual tracking is certainly the easiest (and most cost-effective) way to start tracking your mileage. But the analog method can be very time-consuming—particularly for people and businesses who log a lot of trips.
For people who want less busy work—but don't want to make a larger upfront investment—mobile apps are the way to go. These can take over the majority of your record-keeping, reducing errors and maximizing write-offs. (More on mileage tracking apps, both for iOS and Android, in a moment.)
Because they're the most efficient, GPS tracking devices are generally the best fit for businesses with significant and/or complex mileage tracking needs.
Best Mileage Tracking Apps for Small Businesses
A mileage tracking app offers several benefits, like reducing human error and saving time via features like automatic trip detection.
They also simplify record-keeping by organizing and storing all your mileage data in one place. Additionally, many apps include expense tracking features, allowing you to also track your expenses for each trip. These apps also generate detailed mileage reports—reports you can use for reimbursement, tax deductions, or compliance purposes.
Now, keep in mind—those features are often behind paywalls. But generally, pricing for mileage tracking apps is fair and affordable, ranging between $60 and $200 a year for an individual or small business. And when you integrate your mileage tracking with the rest of your accounting software, you can save yourself additional time.
Now that you know the benefits of mileage tracking apps, let's take a look at some of the best apps on the market:
TripLog
Best for: Maximizing Tax Deductions
TripLog provides an array of tracking options to accommodate many needs. For example, you can view daily trips and plan routes for future journeys within the app. Plus, you can integrate your data with TripLog's expense tracking, time tracking, and schedule features. You can also generate reports that comply with IRS regulations, making it easy to claim allowable expenses accurately.
To get the most out of TripLog, it's best to install the TripLog Drive device, a small Bluetooth dongle you can install in any car with a cigarette lighter. The tracker allows you to record business driving automatically. That adds to the cost, starting at $4.99 per user per month.
If you want full accounting software integration with a tool like Quickbooks or ADP, you'll need to pay more for those features (at least $15 per user per month, according to the website).
TripLog does provide a free plan that allows you to track up to 40 drivers per month. But keep in mind the free version doesn't provide the additional bells and whistles.
Hurdlr
Best for: Rideshare Drivers
Hurdlr's premium plan offers accounting and invoicing features that make managing your business easier. There's an expense tracker with automatic tracking capabilities for recurring expenses—and the simple bookkeeping tools are ideal for freelancers who require minimal record management.
Best of all, Hurdlr calculates your quarterly estimated tax payments for you, which is helpful for independent contractors—like rideshare drivers. And for drivers who don't want to spend much time learning how to use the app, Hurdlr University provides educational content and guidance.
Premium plans are $10 a month, with Pro Plans (which unlocks tax filing features) at $200 a year. There's also a free plan—but keep in mind the free version doesn't provide GPS tracking.
Paid or free, the app lacks additional features for route planning or daily driving summaries. Even so, this is a solid mileage tracker for people who have to track many trips.
Everlance
Best for: Automatic Mileage Tracking
Everlance's free plan offers support for an unlimited number of users, allowing businesses to accommodate their entire team for free. With the paid version, you can also enable customized mileage rates for employees participating in the Fixed and Variable Rate (FAVR) program—a method for reimbursing employees who use their own vehicle for work purposes.
Everlance also provides in-app customer service assistance, an expense tracker, a reimbursement system, and a tax-saving tool—all in one easy-to-use app.
That makes it a comprehensive solution for managing business expenses and maximizing tax benefits. (One thing to note is that Everlance doesn't offer any clock-in/clock-out timesheets or route-planning features.)
MileIQ
Best for: Simple Mileage Tracking
If you're looking for an easy application without much of a learning curve, MileIQ is a great option. Ideal for people who log 5 trips a week or fewer (i.e., less complicated mileage logs), the app's design is focused on ease of use. It also integrates well with Microsoft 365 Business—so if you're a Microsoft user, this could be a good option.
However, it's important to note that MileIQ doesn't have an expense tracker, and it won't automatically calculate your tax deduction.
But at $5.99 per user per month, it's a great tool for basic mileage tracking.
Bottom Line: Use the Tool that Best Meets Your Needs
Tracking mileage is a crucial task for individuals and businesses who want to maximize reimbursements and tax deductions. Maintaining a detailed mileage log ensures compliance with the IRS, maximizes tax savings, and provides a clear audit trail of your travel activities.
With so many mileage tracking approaches to choose from, it's important to look at your tracking needs and figure out which works best for you.
But whatever method you choose, consistently tracking your mileage and keeping detailed records will help ensure you make the most out of your miles—and get your maximum deduction come tax time.
FAQ: Tracking Business Mileage
What is the easiest way to record mileage?
The easiest way to start recording business mileage is to use a pen and paper to write down the essential information about each business trip. But, in the long run, you're better off using a digital method to track miles (like a mileage tracking app or GPS tracking device), as they're easier and more accurate.
Does the IRS ask for proof of mileage?
Yes, the IRS can ask for proof of mileage when you claim business mileage deductions on your tax return.
How do I track mileage for reimbursement?
To track mileage for reimbursement, record trip details, including the date, destination, purpose, and miles driven.
Categorize business trips, calculate total business miles, and determine the reimbursement rate.
Multiply business miles by the rate to find the reimbursement amount—and then submit the reimbursement request with supporting documentation.
Make sure to keep a copy for your records.
