Actual Expenses vs Standard Mileage Calculator
Your 2026 miles, what the car cost, and the rates that apply
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Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Educational estimate only. Confirm the assumptions, current rules, fees, and rounding that apply to your situation before making a decision.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter your 2026 business miles in two parts, January 1 to June 30 and July 1 to December 31, because the IRS business rate rose from 72.5 cents to 76 cents a mile on July 1. Then enter the car's total miles for the year, business and personal.
- 02
Enter the year's running costs for all miles: fuel, insurance, maintenance and repairs, and registration. The calculator applies your business-use share to them.
- 03
If you lease, enter the year's lease payments and leave the car price at 0. If you own the car and started using it for business in 2026, enter what you paid, and depreciation is figured under MACRS within the 2026 passenger-car caps.
- 04
Add the car loan interest you paid and your business parking and tolls, which are deductible under either method, then your marginal tax rate. The self-employment tax rate and the IRS figures are already filled in with their sources.
- 05
Read which method gives the bigger 2026 deduction and the tax saved each way, then the six-year table and chart, which show what happens if you stay on one method, and the rules that decide whether you can switch later.
Formula
Business use = business miles ÷ total miles. Standard mileage = miles January to June × 72.5c + miles July to December × 76c, plus the business share of loan interest and business parking and tolls. Actual expenses = business use × (fuel + insurance + repairs + registration), plus either business use × lease payments or depreciation, plus the same interest, parking and tolls. Depreciation on an owned car = the smaller of cost × business use × the MACRS first-year rate (20%, or 10% straight line at 50% business use or less) and the Rev. Proc. 2026-15 cap × business use. Tax saved = self-employment tax on 92.35% of the deduction + income tax at your marginal rate on the deduction less half that self-employment saving. Basis reduction under the standard rate = business miles × 35c.
Example
A $42,000 car first used for business in 2026, driven 20,000 miles: 7,000 business miles before July 1 and 7,500 after, so business use is 72.5%. The year's fuel, insurance, repairs and registration total $6,350, the loan interest is $1,800 and business parking and tolls $300, at a 22% marginal rate. The standard rate gives $10,775 for the miles plus $1,605 of interest, parking and tolls, $12,380 in all. Actual expenses give $4,604 of running costs plus $6,090 of depreciation (20% of the $30,450 business basis, inside the $8,918 cap) plus the same $1,605, $12,299 in all. The standard rate wins by $81 and saves about $28 more tax: $4,280 against $4,252. It also reduces the car's basis by $5,075. With 100% bonus depreciation the actual figure would be $20,926, but that would close the standard rate for good. Kept for six years at the same miles and costs, actual expenses lead in 2027 and 2028, then fall behind as depreciation runs out, ending $7,803 behind by 2031.
Definitions
- Standard mileage rate
- The IRS's cents-per-mile allowance that stands in for the actual cost of operating a vehicle. For 2026 it is 72.5 cents through June 30 and 76 cents from July 1.
- Actual expense method
- Deducting the business share of what the vehicle really cost: fuel, insurance, repairs, registration, and lease payments or depreciation, instead of a rate per mile.
- Business-use percentage
- Business miles divided by all miles driven in the year. It scales every actual cost and every depreciation cap, and at 50% or less it rules out MACRS, bonus depreciation and Section 179.
- Section 280F limits
- Yearly caps on depreciation for passenger vehicles at or under 6,000 pounds. For 2026: $12,300 in year one, or $20,300 with bonus depreciation, then $19,800, $11,900 and $7,160.
- Basis reduction
- The part of each standard-rate mile the IRS treats as depreciation, 35 cents for 2026. It lowers the car's tax basis, which raises the taxable gain when the car is sold.
Good to know
What the standard rate is really paying you for
The standard mileage rate is not a guess and not a reward. Each year the IRS has an independent contractor study the fixed and variable costs of operating an automobile, and the business rate is built from that study: depreciation or lease payments, insurance, fuel, maintenance and repairs, tires, and registration, all folded into one figure per mile. For 2026 that figure is 72.5 cents through June 30 under Notice 2026-10, and 76 cents from July 1 under Announcement 2026-11, which the IRS issued because fuel prices had climbed. What the rate leaves out matters as much as what it includes. Business parking fees and tolls are deductible on top of it. So is the business share of interest on a car loan for a self-employed driver. Those amounts are the same under either method, which is why this page adds them to both sides. The rate also contains a specific allowance for depreciation: 35 cents of every 2026 business mile, according to Notice 2026-10, up from 33 cents for 2025. That part did not change when the headline rate rose in July. Because the rate is one number for every vehicle, it favors some drivers and shortchanges others. A modest, fuel-efficient car driven a long way costs less per mile than the rate pays, so the standard rate usually wins. An expensive car, or one driven relatively few business miles, can cost more per mile than 76 cents, mostly through depreciation and insurance, and actual expenses can win. On the default figures the two land almost level: $12,380 on the standard rate against $12,299 in actual expenses, for a $42,000 car driven 14,500 business miles. A result that close is common, and it is exactly when the rules about switching later matter most.
The rules that lock a method in
Choosing a method is not a fresh decision every year, and the first year carries the most weight. IRS Publication 463 (2025 edition) sets out the sequence. For a car you own, the standard mileage rate must be chosen in the first year the car is available for business use. If you choose it then, later years are open: you can use either method each year. If you choose actual expenses in the first year and depreciate the car with MACRS, bonus depreciation or Section 179, the standard rate is closed for that car permanently, because the publication bars it for any car depreciated by a method other than straight line over its useful life. Switching from the standard rate to actual expenses later is allowed, with a condition. Depreciation must then be straight line over the car's estimated remaining useful life, and the basis you depreciate is first reduced by the per-mile depreciation built into every standard-rate mile you claimed. Leased cars follow a stricter rule. If you use the standard rate for a leased car, you must use it for the entire lease period, renewals included. Either way the choice is made on the return and cannot be revoked. A few situations rule out the standard rate altogether. Five or more cars used for business at the same time, as in a fleet, means actual expenses for all of them. So does a car on which you have already claimed Section 179 or bonus depreciation. The practical consequence is that a close first-year comparison should usually go to the standard rate, because it keeps both methods available next year. A narrow first-year win for actual expenses can cost far more later if it closes the door the car's mileage would have used.
Depreciation, the caps, and why an expensive car does not write itself off
On the actual-expense side, depreciation is usually the largest line and the most constrained. A car, SUV, truck or van rated at 6,000 pounds gross vehicle weight or less is a passenger automobile under Section 280F, and its depreciation is capped each year regardless of what it cost. For one placed in service in 2026, Rev. Proc. 2026-15 sets the first-year cap at $12,300, or $20,300 when bonus depreciation applies, then $19,800 for the second year, $11,900 for the third, and $7,160 for each year after that. Every cap is multiplied by the business-use share. A car used 72.5% for business has a first-year cap of $8,918 without bonus. On the default $42,000 car, regular MACRS allows 20% of the $30,450 business basis in the first year, $6,090, which sits inside that cap. Bonus depreciation, made 100% and permanent by the 2025 tax law for vehicles acquired after January 19, 2025, would lift the first-year deduction to the $14,718 bonus cap and the actual total to $20,926. That looks decisive, but it closes the standard rate for good, and on a passenger car the basis the cap prevents you from deducting now simply waits for later years. Two tests sit over all of this. Accelerated depreciation and bonus both require more than 50% business use, and that test applies in every year of the recovery period, not just the first. If business use falls to 50% or less, depreciation must be straight line, and any excess already taken is added back to income. And vehicles rated over 6,000 pounds are outside the Section 280F caps entirely, which is why heavy pickups and large SUVs have their own page: the Section 179 vehicle calculator.
Reading the six-year table, and keeping records that hold up
A first-year verdict answers the wrong question if the car will be in the business for years, which is why the table and chart run each method forward. On the default figures the standard rate wins 2026 by $81. Actual expenses then lead in 2027, when MACRS allows 32% of the basis, $9,744, and are $3,247 ahead cumulatively, and still lead after 2028. From 2029 depreciation drops to 11.52% a year and then 5.76%, the standard rate keeps paying the same per mile, and by 2031 the standard rate is $7,803 ahead in total. The table holds your 2026 miles and running costs flat and values later miles at 76 cents, so it is a model of the shape, not a forecast: the rate will change, and costs rise as a car ages. It also leaves out the interest, parking and tolls that are the same under either method. Two more things are easy to miss. The standard rate's 35-cent depreciation component reduces the car's basis, $5,075 on the default miles, and a lower basis means a larger taxable gain when you sell, so some of the standard rate's deduction comes back at the sale. And both methods rest entirely on records. The IRS requires a log kept at or near the time of each trip, showing the date, destination, business purpose and miles, plus receipts for actual costs. Commuting between home and a regular workplace is never business mileage. Only the self-employed and a short list of employees can use either method; W-2 employees cannot deduct unreimbursed driving at all. The figures on this page are estimates of the deduction and the tax it saves, not tax advice, and a preparer can confirm how the rules apply to your vehicle.
Frequently asked questions
Is the standard mileage rate or actual expenses better?
It depends on how expensive the car is to own against how far you drive it. The standard rate pays the same per mile for every car, so cheap-to-run cars driven a long way tend to do better on it, and costly cars driven less tend to do better on actual expenses. On the default figures the two are almost level: $12,380 on the standard rate against $12,299 in actual expenses for a $42,000 car at 72.5% business use, a gap of $81. Taking 100% bonus depreciation would lift the actual figure to $20,926, but only by closing the standard rate for that car for good.
What is the IRS mileage rate for 2026?
For business driving, 72.5 cents a mile for January 1 through June 30, 2026 (IRS Notice 2026-10) and 76 cents a mile from July 1, 2026 (IRS Announcement 2026-11, issued because of higher fuel prices). The medical and moving rate rose from 20.5 to 23.5 cents on the same date, and the charitable rate stays at 14 cents, which is fixed by statute. Miles have to be valued at the rate for the date they were driven.
Can I switch from the standard mileage rate to actual expenses?
Yes, but only in one direction without restriction. IRS Publication 463 (2025 edition) says that for a car you own, you must choose the standard rate in the first year the car is used for business; after that you can use either method each year. If you switch to actual expenses later, depreciation must be straight line over the car's remaining useful life, on a basis reduced by the depreciation built into each standard-rate mile. If you start with actual expenses using MACRS, bonus depreciation or Section 179, you can never use the standard rate for that car.
Can I use the standard mileage rate on a leased car?
Yes, but if you choose it you must use it for the entire lease period, including renewals, and the choice cannot be revoked (IRS Publication 463, 2025 edition). The alternative is deducting the business share of the lease payments along with the other actual costs. For a car worth more than $62,000 when the lease began, Rev. Proc. 2026-15 also requires a small income inclusion each year that trims the lease deduction.
What is the depreciation part of the standard mileage rate?
IRS Notice 2026-10 treats 35 cents of every 2026 business mile as depreciation, up from 33 cents for 2025 and 30 cents for 2024. The July 1 rate increase did not change it. Each of those cents reduces the car's basis, so a higher standard-rate deduction now means a larger taxable gain when you sell. On the default figures, 14,500 business miles take $5,075 off the car's basis.
How much depreciation can I deduct on a business car in 2026?
For a car, SUV, truck or van at or under 6,000 pounds gross vehicle weight placed in service in 2026, Rev. Proc. 2026-15 caps depreciation at $12,300 in the first year without bonus depreciation or $20,300 with it, then $19,800, $11,900 and $7,160 for each later year. Each cap is multiplied by your business-use share, so at 72.5% business use the no-bonus first-year cap is $8,918. Vehicles rated over 6,000 pounds are outside these caps.
Can a W-2 employee deduct car expenses?
No, with a few exceptions. The deduction for unreimbursed employee expenses was suspended in 2018 and made permanent by the 2025 tax law, and IRS Notice 2026-10 confirms the standard rate cannot be used to claim it. Armed Forces reservists, qualified performing artists, fee-basis state and local government officials, employees with impairment-related work expenses and eligible educators are the exceptions. Everyone else should look at whether their employer's reimbursement covers the car instead.