Key Takeaways
- Standard Mileage Rate (Tax Year 2024): 67 cents/mile.
- Must elect SMR in first year of vehicle use.
- Actual Expense = gas, repairs, insurance, depreciation.
- Commuting = NEVER deductible.
- Home office = commute disappears.
- Temporary work location from home = deductible.
Last updated: January 2026
Business Use of Vehicle
Why This Matters for the Exam
Vehicle deductions are heavily tested. Know the standard mileage rate, the first-year rule, and commuting exceptions.
Expect at least 3-4 questions on vehicles.
Two Methods
| Method | Description |
|---|---|
| Standard Mileage Rate | Flat rate per mile |
| Actual Expense | Actual costs × business % |
Standard Mileage Rates
| Tax Year | Rate |
|---|---|
| 2023 | 65.5 cents |
| Tax Year 2024 | 67 cents |
| 2025 | 70 cents |
SMR Includes
| Cost | Included in SMR? |
|---|---|
| Gas, oil | Yes |
| Repairs, maintenance | Yes |
| Insurance | Yes |
| Depreciation | Yes |
| Parking, tolls | NO (deduct separately) |
First-Year Election Rule
| Rule | Effect |
|---|---|
| Elect SMR in year 1 | Can switch to Actual later |
| Elect Actual in year 1 | LOCKED—cannot use SMR ever |
Actual Expense Method
| Expenses Included | Notes |
|---|---|
| Gas, oil | Actual cost |
| Repairs, tires | Actual cost |
| Insurance, registration | Actual cost |
| Depreciation | Subject to §280F limits |
The Commuting Rule
| Trip Type | Deductible? |
|---|---|
| Home → Regular office | NO |
| Office → Client | YES |
| Client A → Client B | YES |
| Home (w/home office) → Client | YES |
| Home → Temporary site | YES |
Home Office Exception
| Scenario | Effect |
|---|---|
| Home is principal place of business | Commute disappears |
| All trips from home | = business trips |
Mileage Log Requirements
| Element | Required |
|---|---|
| Date | Yes |
| Total miles | Yes |
| Business miles | Yes |
| Destination | Yes |
| Business purpose | Yes |
Real-World Scenario (Tax Year 2024)
Scenario: Salesman drives 20,000 miles: 4,000 commuting, 12,000 client visits, 4,000 personal.
- Business miles: 12,000.
- SMR deduction: 12,000 × $0.67 = $8,040.
- Commuting & personal: $0.
On the Exam
Expect 3-4 questions on vehicles, typically:
- Rate Questions: "What is the Tax Year 2024 SMR?"
- First-Year Questions: "Can she switch to SMR after using Actual?"
- Commuting Questions: "Which trip is deductible?"
The key is to remember: 67 cents (Tax Year 2024). Elect SMR in year 1 or lose it. Commuting = never. Home office = no commute.
Test Your Knowledge
Consultant used Actual Expense in year 1. Can she use SMR in year 2?
A
B
C
D
Test Your Knowledge
Which allows deducting home-to-first-stop mileage?
A
B
C
D
Test Your Knowledge
Tax Year 2024 standard mileage rate?
A
B
C
D