Two IRS-approved methods for deducting vehicle costs. You can only use one per vehicle per year. Here's the real comparison with numbers, not just theory.
The standard mileage rate is set by the IRS annually and is generally higher than actual per-mile costs for average vehicles. Here's a side-by-side for a typical gig driver scenario: 25,000 business miles, 80% business use, midsize sedan.
| Expense | Standard Mileage | Actual Expenses |
|---|---|---|
| Base vehicle deduction | $18,125 (25K × $0.725) | $14,200 (est. actual costs × 80%) |
| Gas, insurance, maintenance, depreciation | Included in rate | Included in actual costs above |
| Tolls (additional) | $240 extra | $240 extra |
| Total deduction | $18,365 | $14,440 |
| Winner | ✓ Standard wins by $3,925 | — |
Actual expenses only wins in specific situations: very expensive vehicles (luxury, truck) with high real costs, low mileage combined with high fixed costs, or vehicles financed with significant interest. If you're driving a typical sedan or SUV and logging 15,000+ business miles per year, standard mileage wins and requires far less paperwork.
The IRS requires you to choose your method in the first year you use the vehicle for business. If you choose standard mileage in year one, you can switch to actual expenses in a later year. If you choose actual expenses in year one, you are locked in — you can never switch to standard mileage for that vehicle.
This asymmetry strongly favors starting with standard mileage. You keep your options open and almost certainly get a larger deduction anyway. There is no scenario where locking yourself into actual expenses in year one is advisable for a typical gig vehicle.
GigExit Pro tracks your real hourly rate after gas, miles, vehicle wear, and self-employment tax. Not what the app shows — what you actually keep.
See GigExit Pro →You can switch from actual expenses to standard mileage only in your first year using that vehicle. Once you choose standard mileage, you must stick with it for that vehicle's remaining useful life.
You only need a mileage log showing your business miles driven. The standard mileage method at $0.725 per mile in 2026 covers all vehicle operating costs without requiring receipts for gas, maintenance, or repairs.
Standard mileage wins for most gig workers because the IRS sets the rate deliberately high to cover typical vehicle costs. With 25,000 business miles, standard mileage typically produces a deduction about $2,800 larger than actual expenses.
Yes, both standard mileage and actual expense methods allow you to deduct tolls and parking separately in addition to your primary vehicle deduction, maximizing your total tax benefits.