Tax Deductions

Vehicle Deductions for Makers: Mileage Method vs Actual Expenses & IRS Requirements

Do you drive to pick up materials from suppliers? Deliver finished products to wholesale customers? Drop shipments at the post office? Those miles add up—and they're tax-deductible. Whether you use the simple standard mileage rate ($0.67/mile in 2024) or the actual expense method, vehicle deductions can save makers $1,500-$4,000 annually. This guide breaks down both methods, what qualifies as business use, tracking requirements, and how to maximize your vehicle deductions.

By Nick Jain•January 22, 2025•11 min read

The $3,200 Emily Was Leaving on the Road

Emily makes organic soaps and sells to 15 boutiques across her region. Every month, she drives to deliver restocks, pick up materials from her supplier, and drop off shipments at UPS.

For three years, she never tracked her business mileage. "I didn't think it was worth the hassle," she said. "How much could it really save?"

At a maker meetup, a fellow artisan asked: "Do you track your delivery miles?" Emily said no. The artisan was shocked: "You're probably driving 400-500 business miles a month. At $0.67/mile, that's $3,000+ per year you're leaving on the table."

Emily started tracking in 2024. Over the year, she logged 4,800 business miles:

• 4,800 miles × $0.67/mile = $3,216 deduction
• At 35% effective tax rate = $1,126 tax savings

"I can't believe I ignored this for three years," Emily said. "That's $3,000+ in lost deductions. Now I track every trip with an app—takes 5 seconds per drive."

Vehicle Deduction Basics: Two Methods

The IRS allows you to deduct vehicle expenses using one of two methods. You can choose whichever gives you a bigger deduction—but you must pick one method per vehicle per year and stick with it.

Standard Mileage Rate

Multiply business miles driven by the IRS standard rate. Simple, no expense tracking required.

2024 Rate:

$0.67 per mile

(IRS updates this annually)

Example:

1,000 business miles × $0.67 = $670 deduction

Includes: Depreciation, fuel, maintenance, insurance (proportionally)

Best for: Most makers. Simple, easy tracking, no receipts needed.

Actual Expense Method

Deduct the business percentage of all actual vehicle expenses. More work, potentially larger deduction.

Calculation:

Business % × (Gas + Oil + Repairs + Insurance + Registration + Depreciation)

Example:

$6,000/year expenses × 60% business = $3,600 deduction

Requires: Tracking all vehicle expenses + calculating business %

Best for: High vehicle expenses, low mileage, or expensive vehicles.

Standard Mileage Rate: The Simple Method

For most makers, the standard mileage rate is the easiest and most practical option. Track your business miles, multiply by $0.67, done.

Step-by-Step: Standard Mileage Rate

Step 1: Track Business Miles

Keep a log of every business trip (date, miles, purpose). Use a mileage app or manual log.

Step 2: Total Business Miles for the Year

Example: 400 miles/month × 12 months = 4,800 miles/year

Step 3: Multiply by Standard Rate

4,800 miles × $0.67 = $3,216

Deduction:

$3,216

At 35% effective tax rate: saves $1,126/year

Standard Mileage Rate Pros & Cons

Pros:

✓ Simple calculation (miles × rate)
✓ No need to track gas, repairs, insurance
✓ No receipts required (just mileage log)
✓ IRS updates rate annually to reflect fuel costs
✓ Easier audit defense (just show mileage log)

Cons:

✗ May result in smaller deduction than actual expenses
✗ Can't deduct actual expenses separately (parking/tolls only)
✗ Must use mileage method first year to have option later

Actual Expense Method: Maximum Deduction

The actual expense method can yield a larger deduction if your vehicle expenses are high relative to miles driven. You calculate your business use percentage, then deduct that percentage of all vehicle costs.

Step-by-Step: Actual Expense Method

Step 1: Calculate Business Use Percentage

Track total miles and business miles for the year.

Example:
Business miles: 6,000
Total miles driven: 10,000
Business %: 6,000 ÷ 10,000 = 60%

Step 2: Add Up All Vehicle Expenses

• Gas and oil: $2,400
• Repairs and maintenance: $800
• Insurance: $1,200
• Registration and fees: $200
• Lease payments or depreciation: $1,400
Total: $6,000

Step 3: Apply Business Percentage

$6,000 × 60% = $3,600

Total Deduction:

$3,600

At 35% effective tax rate: saves $1,260/year

Mileage vs Actual: Which Method Gives You More?

Use Standard Mileage if: You drive many miles but have a fuel-efficient vehicle with low expenses. The $0.67/mile adds up quickly.

Use Actual Expense if: You drive fewer miles but have an expensive vehicle (high payments, insurance, repairs). Your business % of actual costs exceeds mileage deduction.

Example: 3,000 business miles × $0.67 = $2,010 (mileage). But if your vehicle costs $8,000/year and you use it 50% for business, actual expense = $4,000 (better).

What Counts as Business Miles?

Not all driving is deductible. The IRS has clear rules on what qualifies as "business use" vs "personal use."

Business Miles That Qualify

✓ Trips to supplier to pick up materials (clay, fabric, leather, etc.)
✓ Deliveries to wholesale customers (boutiques, galleries, retailers)
✓ Trips to shipping centers (UPS Store, USPS, FedEx) to drop off Etsy orders
✓ Travel to craft fairs, markets, or pop-up events to sell products
✓ Trips to bank for business deposits
✓ Driving to meet with clients, designers, or collaborators
✓ Trips to buy business equipment (picking up a kiln from a seller)

Personal Miles That DON'T Qualify

✗ Commuting from home to a separate office or studio (that's personal)
✗ Social trips unrelated to business
✗ Personal errands (grocery shopping, picking up kids, etc.)
✗ Driving to local events for pleasure (not business-related)

Important exception: If you have a qualifying home office, trips from your home to business locations (suppliers, customers, shipping) count as business miles—not commuting.

Tracking Requirements: Mileage Logs

The IRS requires contemporaneous records—meaning you must track mileage at the time of the trip, not reconstruct it months later. Here's what your mileage log must include:

Required Mileage Log Information

Date of trip: When you drove
Starting point and destination: Where you drove from and to
Business purpose: Why the trip was business-related
Miles driven: Odometer readings or calculated distance

Example Mileage Log Entry

Date: 01/15/2025

From: Home studio (123 Main St)

To: Leather supplier (456 Oak Ave)

Purpose: Pick up material order

Miles: 18.4

Best Mileage Tracking Tools

Manual logs work, but apps make tracking effortless. Here are the top options:

MileIQ

Automatic mileage tracking using GPS. Swipe trips to classify as business or personal. Generates IRS-compliant reports.

Stride

Free app designed for self-employed. Auto-detects drives, tracks mileage, and estimates deductions in real-time.

Everlance

Tracks mileage + expenses. Syncs with TrueCraft for seamless tax reporting.

Manual Spreadsheet

Simple Excel/Google Sheets log with columns: Date, From, To, Purpose, Miles. Low-tech but IRS-compliant.

Mixed-Use Vehicles: Business Percentage Matters

Most makers don't have a vehicle used exclusively for business. If you use your car for both business and personal trips, you can only deduct the business percentage.

Mixed-Use Vehicle Example

Scenario:

Total miles driven in 2024: 12,000

Business miles (deliveries, material pickups, craft fairs): 5,000

Personal miles (errands, social, family): 7,000

Business %: 5,000 ÷ 12,000 = 41.7%

Standard Mileage Method:

5,000 business miles × $0.67 = $3,350 deduction

Actual Expense Method:

$7,200 total expenses × 41.7% = $3,002 deduction

In this case, standard mileage gives a better deduction ($3,350 vs $3,002).

Home Office Impact: Trips from Home Count as Business

If you have a qualifying home office (exclusive and regular use), the IRS considers your home your principal place of business. This means:

✓ Trips from home to suppliers = business miles (not commuting)
✓ Trips from home to craft fairs = business miles
✓ Trips from home to shipping centers = business miles

Why this matters: Without a home office, driving from your house to a separate business location is considered commuting (not deductible). With a home office, those same trips become fully deductible business miles.

Real Example: Delivery-Heavy Maker Saves $4,000

Let's walk through a real scenario showing how a jewelry maker maximized vehicle deductions.

Case Study: Rachel's Jewelry Business

Business Model:

Rachel makes handmade jewelry and sells to 20 boutiques. She delivers restocks monthly to each location, picks up materials from suppliers bi-weekly, and ships Etsy orders from the UPS Store.

2024 Driving:

• Monthly boutique deliveries: 15 trips × 25 miles avg = 375 miles/month
• Bi-weekly material pickups: 2 trips × 18 miles avg = 36 miles/month
• Weekly UPS drop-offs: 4 trips × 8 miles avg = 32 miles/month
Total business miles/month: 443
Annual business miles: 443 × 12 = 5,316 miles

Rachel's Deduction (Standard Mileage):

5,316 miles × $0.67 = $3,562

Rachel's effective tax rate: 35%

Tax savings: $1,247/year

Over 5 Years:

Total deductions: $3,562 × 5 = $17,810

Total tax savings: $1,247 × 5 = $6,235

Rachel uses the Stride app to auto-track her drives. "It takes zero effort," she said. "The app detects when I'm driving and logs it automatically. At year-end, I export the report and hand it to my accountant. $6,000+ in tax savings over 5 years just for tracking my normal deliveries."

Vehicle Depreciation: Alternative to Mileage Method

If you use the actual expense method, you can also depreciate your vehicle over 5 years (or use Section 179 to deduct a portion immediately). This is in addition to your business % of gas, repairs, and insurance.

Vehicle Depreciation Example

Scenario:

You buy a $30,000 truck used 60% for business deliveries.

Depreciation Options:

Option 1: Straight-line (5 years):

$30,000 × 60% = $18,000 business portion

$18,000 ÷ 5 years = $3,600/year depreciation

Plus business % of gas, repairs, insurance

Option 2: Section 179:

Deduct up to $12,200 (2024 limit for vehicles over 6,000 lbs) immediately

$12,200 × 60% = $7,320 first-year deduction

Note: Vehicle depreciation limits are complex (luxury auto limits, bonus depreciation rules). Consult IRS Publication 946 or a tax professional for your specific situation. See our equipment depreciation guide for details.

Common Mistakes to Avoid

Mistake 1: Not Tracking Mileage at All

You make deliveries all year but never log miles. Come tax time, you have no records. Without a contemporaneous log, the IRS will disallow the entire deduction.

Solution: Start tracking immediately with a mileage app. Even mid-year tracking is better than nothing.

Mistake 2: Mixing Personal and Business Miles

Claiming 100% business use when you also use the vehicle for personal errands, vacations, and daily life. If audited and the IRS finds personal use, they'll disallow deductions and penalize you.

Solution: Track all miles (total and business) to calculate accurate business percentage. Be honest.

Mistake 3: Deducting Commuting Miles

Claiming miles from home to a separate office/studio as business miles. That's commuting (personal), not business use—unless you have a qualifying home office.

Solution: Establish a home office if you work from home. Then trips from home to business locations become deductible.

Mistake 4: Reconstructing Logs After the Fact

You didn't track mileage during the year, so in April you estimate or recreate a log from memory. The IRS requires contemporaneous records—created at the time of the trip.

Solution: Use an app that auto-tracks in real-time. Retroactive logs are risky in audits.

Success Story: Simplified Tracking Saved Mark 80% Time

Mark runs a woodworking business and delivers custom furniture to clients across the state. For years, he manually logged mileage in a notebook after each trip.

"It was tedious," Mark said. "I'd forget to write trips down, then estimate at the end of the month. I knew I was missing deductions but didn't have time to track everything."

In 2024, he switched to MileIQ: "The app detects every drive automatically. I swipe 'business' or 'personal,' and it logs everything. At year-end, I exported a full IRS-compliant report—took 30 seconds."

• 2023 (manual tracking): Claimed 3,200 miles = $2,144 deduction (he estimated conservatively)
• 2024 (MileIQ): Logged 4,900 miles = $3,283 deduction
• Extra deduction: $1,139 (saved $399 in taxes)

"I was losing $400/year by not tracking accurately," Mark said. "The app paid for itself in the first month. Tracking went from 15 minutes/week to 5 seconds per trip."

How TrueCraft Simplifies Vehicle Deductions

Manually tracking mileage, calculating business percentages, and comparing methods is time-consuming. TrueCraft automates the entire process.

Mileage Tracker App Integration

TrueCraft integrates with MileIQ, Stride, and Everlance. Your trips sync automatically, categorized as business or personal. No manual entry required.

Standard Rate Calculator

Enter your business miles and TrueCraft calculates your deduction using the current IRS standard rate (auto-updated annually). Instant tax savings estimate.

Actual Expense Tracker

Link your bank account or upload receipts. TrueCraft auto-categorizes gas, repairs, insurance, registration. Calculates business percentage and total deduction.

Business % Calculator

TrueCraft compares your total miles to business miles and calculates your business use percentage. Shows you which method (mileage vs actual) saves you more.

Stop Leaving Miles (and Money) on the Road

Every delivery, every material pickup, every craft fair trip—those miles add up to real tax savings. TrueCraft makes tracking effortless and maximizes your vehicle deductions automatically.

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