Updated for tax year 2026. If you own an LLC or small business, you can write off a vehicle used for business, but only the business-use portion, and only if you follow the IRS rules for method, limits, and recordkeeping.
At a glance:
- You can deduct only the business-use percentage of a vehicle.
- Two methods: the standard mileage rate or the actual expense method.
- Standard mileage rate: 70 cents per mile (2025); 72.5 cents per mile (2026).
- Section 179 and bonus depreciation can accelerate write-offs for qualifying vehicles.
- Claiming Section 179 or bonus depreciation requires IRS Form 4562.
Who can write off a car as a business expense?
You can generally claim a vehicle deduction if:
- You are a sole proprietor, partner, or operate as an LLC, S corp, or corporation.
- You are self-employed or earn business income through freelance, contract, gig work, or a small business.
- The vehicle is used for business purposes, such as client meetings, hauling equipment, or deliveries.
The IRS only lets you deduct the business-use portion. If you use the vehicle 80% for business and 20% for personal use, you can deduct 80% of eligible expenses.
When can you write off a car?
Qualifying business travel includes:
- Driving to meet clients
- Visiting job sites
- Making deliveries
- Traveling between office locations
Commuting does not count. The drive from home to your main office is a personal expense. However, if your home is your primary place of business and you drive to meet clients or visit worksites, that travel can qualify.
The two deduction methods
1. Standard mileage rate
Multiply your business miles by the IRS standard mileage rate:
- 2025: 70 cents per mile
- 2026: 72.5 cents per mile
This flat rate includes depreciation, gas, maintenance, and typical vehicle costs, which you cannot deduct separately under this method. You can still deduct: car registration fees and property taxes, parking and tolls, and auto loan interest.
Example: 15,000 business miles in 2026 × $0.725 = $10,875 deduction.
You cannot use the standard mileage rate if you:
- Use five or more cars at the same time (fleet operations).
- Claimed depreciation using a method other than straight line.
- Used the Modified Accelerated Cost Recovery System (MACRS).
- Claimed a Section 179 deduction on the car.
- Claimed the special bonus depreciation allowance on the car.
- Claimed actual car expenses after 1997 for a leased car.
Tax tip: To use the standard mileage rate in future years, you must use it in the first year of business use. If you claim actual expenses in the first year, you cannot switch to the standard method later.
2. Actual expense method
Track and total everything it costs to operate the car, then multiply by your business-use percentage. Costs can include gas and oil, insurance, garage rent, repairs and maintenance, depreciation or lease payments, Section 179 deduction, registration fees and taxes, parking and tolls, and auto loan interest.
Example: $12,000 in total 2026 vehicle expenses × 75% business use = $9,000 deduction.
Tax tip: If you want to use Section 179 or bonus depreciation in the first year the vehicle is placed in service, you must use the actual expense method.
Which method is better?
Neither is inherently better; it depends on your situation. If you drive many business miles in an inexpensive car, standard mileage may be easier and just as valuable. If your car is new, expensive, or mostly for business, actual expenses (including Section 179) may give a higher deduction but require more recordkeeping. Either way, you must track business vs. personal use with a mileage log.
Section 179 and bonus depreciation
Section 179 lets small business owners and self-employed taxpayers deduct the cost of qualifying business vehicles in the first year they are placed in service, instead of spreading depreciation over several years.
To qualify for Section 179, the vehicle must be:
- New or used (but new to you)
- Purchased and placed in service in the same tax year
- Used more than 50% of the time for business
| Section 179 | Bonus depreciation | |
|---|---|---|
| How it works | Deduct a set dollar amount of the vehicle’s cost | Deduct a percentage of the vehicle’s remaining cost |
| Income limit | Generally limited to taxable business income | Can exceed business income and create a net operating loss |
| Order of use | Claimed first | Applied to remaining basis after Section 179 |
| Vehicle limits | Subject to annual caps by vehicle type | Also subject to annual caps for light passenger vehicles |
Bonus depreciation was originally capped at 40% for 2025 and 20% for 2026, but the Working Families Tax Cuts (One Big Beautiful Bill) restored 100% bonus depreciation for qualifying property acquired after Jan. 19, 2025, and placed in service before Jan. 1, 2030.
To qualify for 100% bonus depreciation, you must meet all of these tests:
- You acquired the car after Jan. 19, 2025, with no binding written contract before Jan. 20, 2025.
- You bought the car new or used.
- You placed the car in service in your trade or business during the tax year.
- You used the car more than 50% for business during the tax year.
You can take both in the same year if you qualify, but you must take Section 179 first, then bonus depreciation on the remainder.
Deduction limits by vehicle type
The IRS categorizes vehicles as light, heavy, or other based on gross vehicle weight rating (GVWR).
| Deduction item | 2025 | 2026 |
|---|---|---|
| Business mileage rate | 70 cents per mile | 72.5 cents per mile |
| Light vehicle Section 179 limit (100% business use) | $12,200 | $12,300 |
| Light vehicle total first-year cap with bonus (100% business use) | $20,200 | $20,300 |
| Heavy SUV Section 179 cap | $31,300 | $32,000 |
| Heavy SUV bonus depreciation limit | No separate cap; 100% on remaining basis after Section 179 | |
| Other / special-use vehicles | No vehicle-specific cap | |
- Light vehicles (under 6,000 lbs GVWR): Many sedans, crossover SUVs, and compact pickups. These face the strictest first-year caps. Reduce the limits by your business-use percentage.
- Heavy SUVs and other vehicles (6,001 to 14,000 lbs GVWR): Have a Section 179 cap but are not subject to the separate total first-year cap for passenger cars. Remaining basis may qualify for 100% bonus depreciation with no additional dollar cap.
- Other vehicles (special-use or over 14,000 lbs GVWR): Generally not subject to the special Section 179 limits for passenger vehicles and heavy SUVs.
Full depreciation limits are in IRS Publication 463.
Section 179 example: A used light vehicle (3,500 lbs GVWR) bought in May 2026 for $40,000, used 60% for business:
- Business-use cost: $40,000 × 60% = $24,000
- Maximum Section 179: 60% × $12,300 = $7,380
- Total first-year cap: 60% × $20,300 = $12,180
- Section 179: $7,380; bonus depreciation: $4,800; total first-year deduction: $12,180
- Remaining $11,820 can generally be recovered over future years through regular depreciation.
Form 4562
If you claim Section 179 or bonus depreciation, you must file IRS Form 4562 (Depreciation and Amortization) with your income tax return.
Recordkeeping
No matter which method you use, keep:
- A mileage log (date, destination, purpose, total miles)
- Receipts for gas, insurance, repairs, and other expenses
- Odometer readings at the start and end of the year
- Purchase or lease agreements if depreciating the vehicle
The IRS requires this documentation to support your deduction if you are audited. IRS Publication 463 explains how to prove vehicle expenses.
FAQs
Can I deduct a leased vehicle?
Yes. Lease payments can be deducted based on the business-use percentage. You can use standard mileage or actual expenses, but if you use the standard mileage rate for a leased car, you must use it for the entire lease period, including renewals. With actual expenses, you typically deduct lease payments rather than depreciation, unless you have a conditional sales contract (such as lease-to-own).
What if I finance the vehicle?
You can still deduct depreciation and interest on the business portion of the loan. The entire purchase price is not deductible at once unless you qualify for Section 179 and/or bonus depreciation.
Can I switch deduction methods later?
Only if you used the standard mileage method in the first year. If you use actual expenses first, you cannot switch to standard mileage later.
Can I still take Section 179 if I use my vehicle for personal use?
Yes, but you must use the vehicle more than 50% for business and take a partial deduction proportional to your business use.
What if I just started using my personal car for my business?
You cannot take a Section 179 deduction for a personal car you have owned for a while and later converted to business use. Section 179 is only available for cars purchased and placed in service for business during the same year. You can still use the standard mileage deduction.
What if I use my car 50% or less for business?
According to the IRS, you cannot take the Section 179 deduction or the special depreciation allowance. You must figure depreciation using the straight line method over a 5-year recovery period, and continue using straight line even if business use later exceeds 50%.
Can I take Section 179 for a pre-owned vehicle?
Yes, both new and used vehicles qualify, as long as the vehicle is new to you.
Where do I find my vehicle’s GVWR?
It is typically on the manufacturer’s sticker inside the driver’s side door. Some models are borderline, so small trim differences can change whether a vehicle is light or heavy.
Do electric vehicles qualify for the same tax benefits?
Yes, EVs can qualify for the same business vehicle deductions, including standard mileage or actual expenses, plus Section 179 and bonus depreciation when the rules are met. The federal EV tax credit is generally not available for vehicles acquired after Sept. 30, 2025.
The One Big Beautiful Bill is now also being referred to by lawmakers as the Working Families Tax Cut Act. Both names refer to the same set of tax changes.
This article is for informational purposes only and not legal or financial advice.