When it comes to tax deductions for vehicle expenses, you may only think of business-related driving expenses. But businesses aren’t the only ones who can deduct these costs; individuals can sometimes claim driving expenses on their individual tax returns too. Understand how.
Changes Introduced by the Tax Cuts and Jobs Act (TCJA)
Before 2018, you could potentially deduct miles driven for business, medical, moving, or charitable purposes. But under the TCJA, for tax years 2018 through 2025, the rules have changed, especially for business and moving miles. These adjustments may impact the tax benefits you can claim for medical and charitable miles as well.
Previously, employees could deduct unreimbursed business mileage as a miscellaneous itemized deduction. However, this deduction was subject to a 2% adjusted gross income (AGI) threshold, meaning only amounts above 2% of your AGI could be claimed. Now, under the TCJA, all miscellaneous itemized deductions subject to the 2% AGI floor are suspended for 2018–2025, eliminating the deduction for unreimbursed business miles for employees.
If you’re self-employed, you’re still eligible to deduct business mileage from self-employment income, and this deduction is not subject to the 2% AGI floor. So, as long as the mileage qualifies, it remains deductible.
Medical and Moving Expenses
Before 2018, miles driven for work-related moving expenses were generally deductible as an “above the line” deduction, meaning you didn’t need to itemize to claim it. However, from 2018 to 2025, only active-duty military members can deduct moving expenses.
If you itemize, you can still deduct miles driven for medical purposes as part of your overall medical expenses. For instance, transportation costs to medical appointments may be included in deductible medical expenses. For 2024, these expenses are deductible if they exceed 7.5% of your AGI.
Charitable driving expenses can still be deducted, but the deduction rate for charitable miles isn’t adjusted for inflation and remains at 14 cents per mile. To claim this deduction, you must itemize, and because the standard deduction nearly doubled starting in 2018, fewer taxpayers itemize their deductions now. If you take the standard deduction, you won’t be able to deduct charitable or medical miles, even if you exceed the AGI threshold for medical expenses.
Deduction Rates for 2024
Instead of tracking actual vehicle costs, you can use the IRS standard mileage rates to calculate your deductions for 2024, depending on the purpose of the trip:
Business: 67 cents per mile
Medical: 21 cents per mile
Moving for active-duty military: 21 cents per mile
Charitable: 14 cents per mile
In addition to mileage, you can deduct related expenses like parking fees and tolls. Remember, you must keep accurate records of the miles driven to substantiate your deductions.
Have Questions?
If you have questions about deducting vehicle-related expenses or would like assistance with tax planning, don’t hesitate to reach out. We’re here to help make tax time easier.