Mileage vs. Actual Expenses: Which Is Better for Gig Drivers?
The IRS lets you choose between two methods for deducting vehicle costs. Choosing the right one can save you hundreds or even thousands of dollars each year.
Standard Mileage Rate
72.5¢ per mile (2026)
- Simple to calculate
- Covers gas, insurance, depreciation, maintenance
- Only need to track miles driven
- Example: 25,000 miles = $18,125 deduction
- Must use in first year to keep option open
Best for: most gig workers
Actual Expenses Method
Itemized costs
- Gas, oil, tires, repairs, insurance, registration
- Depreciation of vehicle
- Must track every receipt
- Calculate business-use percentage
- More record-keeping required
Best for: newer/expensive vehicles with high payments
Which Should You Choose?
Most gig workers benefit more from the standard mileage rate. It is simpler, requires less record-keeping, and often produces a higher deduction than actual expenses. The actual expenses method may be better if you have a newer vehicle with high lease or loan payments and relatively low mileage.
Important: if you want to use the standard mileage rate, you must use it in the first year you use the vehicle for business. You can switch to actual expenses later, but not the other way around.
Track Both Methods Automatically
ShiftTracker tracks mileage and expenses so you can compare which method saves you more at tax time.
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