TaxWatch: Is driving a big part of your business? Good news: IRS increases tax-deductible mileage rate. Here’s how much you can deduct.

    Breathing New Life into Tax Deduction: IRS Increases Tax-Deductible Mileage Rate

    More Good News for Business Drivers

    Drivers and entrepreneurs rejoice! IRS is increasing the tax-deductible mileage rate this year, which could mean great savings for your business come tax time. Here’s all you need to know:

    Eligible Expenses

    You can deduct a portion of the costs related to driving for business, including the following expenses:

    • Gasoline
    • Parking/Toll fees
    • Maintenance/Repair Costs

    If you use your vehicle for both business and personal use, you can only deduct the portion of expenses attributable to your business use of the vehicle.

    How Much Can I Deduct?

    The IRS has increased the tax-deductible mileage rate to 58 cents/mile. This is a 20.5 cent increase from the previous rate of 37.5 cents/mile in 2020. So if you drove 30,000 miles for business in 2021, you’re eligible for a deduction of up to $17,400.

    Things to Keep in Mind

    The IRS does require that you keep a mileage log to prove that you’re using your vehicle for business purposes and to document the miles driven. This is to avoid any issues with claiming the deduction.

    If you’re a self-employed individual and/or small business owner, use this as an opportunity to keep more money in your pocket this tax season. Reach out to a certified tax professional and have them review your individual situation so you can optimize your deductions and save even more.

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