Business Vehicle Deduction Calculator 2026

Standard mileage vs. actual expense: which method works better?

The IRS lets you choose between two methods for deducting business vehicle costs. The right choice depends on your vehicle cost, how much you drive, and what your actual operating costs are — the calculator above does the math for your specific numbers. Here's how each method works:

§280F luxury auto caps for light vehicles (≤6,000 lbs GVWR)

Despite the "luxury" label, §280F caps apply to essentially every passenger car regardless of actual price. If your car, light truck, or van has a gross vehicle weight rating of 6,000 lbs or less, annual depreciation is capped by Revenue Procedure 2026-15:

These caps apply to the business-use portion of depreciation. A car with 60% business use and a $60,000 purchase price has $36,000 eligible for depreciation, but is capped at $20,300 in Year 1 (with bonus). The unrecovered basis spills into later years at the capped annual amounts — which is why expensive light vehicles can take 8–10+ years to fully depreciate.

Heavy SUV and truck strategy (>6,000 lbs GVWR)

Vehicles with a GVWR above 6,000 lbs (and ≤14,000 lbs) are not "passenger automobiles" under §280F. They're treated as 5-year MACRS property with two key differences from light vehicles:

1. §179 deduction up to $32,000 — §179(b)(5)(A) caps expensing for passenger-purpose SUVs at $32,000.² Vehicles designed to seat more than 9 behind the driver (large vans, buses) or with a 6-ft+ enclosed cargo area not accessible from the passenger compartment are exempt from this cap entirely.
2. 100% bonus depreciation on the rest — after taking $32,000 of §179, the remaining basis qualifies for 100% first-year bonus depreciation under §168(k) as permanently restored by OBBBA (for property placed in service after January 19, 2025).³

Worked example: A consultant buys a Ford Expedition (GVWR: 7,850 lbs) for $72,000 and uses it 80% for business. Business-use cost = $57,600.

• §179 deduction: $32,000
• Remaining basis: $25,600
• 100% bonus depreciation: $25,600
• Total Year 1 deduction: $57,600 — vs. $20,300 maximum for a light car at 100% business use

At a 37% combined federal + SE tax effective rate, that's roughly $21,000+ in additional first-year tax savings compared with a similarly priced light vehicle.

Mileage log requirements — what the IRS actually checks

Both methods require a contemporaneous mileage log. "Contemporaneous" means recorded at or near the time of the trip — not reconstructed from memory months later. The IRS regularly disallows vehicle deductions in audit for inadequate records. Your log must document for each trip:

• Date
• Destination (specific location, not just "client")
• Business purpose (brief description of the meeting or task)
• Miles driven
• Odometer readings at start and end of year (and for each trip if you want the most defensible log)

Several apps (MileIQ, Everlance, Driversnote) GPS-track every trip automatically and export IRS-compliant reports. For a $5,000–$20,000+ annual vehicle deduction, a $10/month app that protects it is an obvious call.

S-corp owners: use an accountable plan, not Schedule C

If you've elected S-corp status, you don't file a Schedule C — you're an employee of your own corporation. Vehicle deductions must flow through a corporate accountable plan to be tax-efficient. Two options:

1. Mileage reimbursement at the federal rate (72.5¢/mile): The S-corp reimburses you at the IRS rate. The corporation deducts it; the reimbursement is non-taxable to you. No FICA on the reimbursement. This is the most common approach.
2. The corporation owns the vehicle: The S-corp purchases and depreciates the vehicle directly, deducting actual expenses. You report any personal-use portion as a taxable fringe benefit (W-2 Box 1 income) using the IRS annual lease value tables.

Without an accountable plan, reimbursements are additional W-2 wages — taxed and FICA'd — and the TCJA eliminated the employee expense deduction that used to offset this. See: S-Corp Accountable Plan Guide →

Common mistakes to avoid

• Choosing actual expense in Year 1 without running the numbers first. For a light car with low actual costs and high mileage, standard mileage often wins — and you've now locked out that option permanently.
• Confusing the $32,000 §179 SUV cap with the §280F luxury-auto cap. They're completely different rules. Heavy SUVs have the $32,000 §179 cap; light cars have the §280F annual depreciation caps. Heavy SUVs get bonus depreciation on top of §179; light cars are subject to the annual §280F limits even with bonus depreciation elected.
• Deducting personal-use miles. Business miles only. The IRS uses the ratio of business miles to total miles as the business-use percentage — keep that percentage supported by your mileage log.
• Missing the deemed-depreciation basis reduction when switching methods. If you used the standard mileage rate and later switch to actual, you must reduce the vehicle's adjusted basis by 35¢ for every business mile driven under the standard rate. For 50,000 miles at 35¢, that's a $17,500 basis reduction before you start depreciating under MACRS.
• Claiming home-to-office commuting as business miles. Home office helps here — if your home office qualifies as your principal place of business under § 280A, trips from home office to client sites are deductible. But claiming commuting mileage without a qualifying home office is the most common vehicle audit trigger.
• Forgetting §179 income limitation. §179 cannot create a loss — it's limited to business taxable income. Excess §179 carries forward indefinitely and can be taken in a future year when you have sufficient income.

1. 2026 standard business mileage rate: 72.5¢/mile, up 2.5¢ from 2025. Depreciation component: 35¢/mile. IRS Notice 2026-10: IRS.gov — 2026 Standard Mileage Rate · IRS Standard Mileage Rates and Maximum Auto FMVs 2026.
2. §280F luxury auto depreciation caps for 2026 (light passenger vehicles ≤6,000 lbs GVWR): Year 1 no bonus $12,300 / with bonus $20,300; Year 2 $19,800; Year 3 $11,900; Year 4+ $7,160. Revenue Procedure 2026-15. §179 SUV cap for heavy vehicles (>6,000 lbs, ≤14,000 lbs): $32,000 per §179(b)(5)(A). Source: IRS Rev. Proc. 2026-15 (§280F tables) · Section179.org 2026 Vehicle Deductions.
3. 100% bonus depreciation for qualified property placed in service after January 19, 2025: One Big Beautiful Bill Act (OBBBA), enacted July 2025, permanently restored §168(k) 100% first-year expensing. Applies to remaining vehicle basis after §179 for heavy SUVs. Tax Foundation — OBBBA Tax Provisions.
4. 2026 federal income tax brackets, standard deduction ($16,100 single / $32,200 MFJ), and SE tax mechanics: IRS Rev. Proc. 2025-32 · Tax Foundation 2026 Tax Brackets · IRS Topic 554 — Self-Employment Tax. SS wage base $184,500: SSA.gov Contribution and Benefit Base 2026.

Tax values verified as of May 2026. §280F caps per Rev. Proc. 2026-15. Mileage rate per IRS Notice 2026-10. Bonus depreciation per OBBBA (July 2025). IRC § 179(b)(5)(A) governs heavy SUV expensing cap.