The IRS gives you two ways to deduct vehicle expenses: standard mileage rate or actual expenses. Which method you use determines whether tracking maintenance costs even matters.

With the standard mileage rate, you multiply your business miles by the IRS rate (67 cents per mile in 2024). This rate already factors in gas, insurance, depreciation, and maintenance. You don’t track individual maintenance costs because the mileage rate covers them. You just need an accurate mileage log.

With the actual expense method, you deduct the real costs of operating your vehicle. Gas, oil changes, tires, repairs, insurance, registration, depreciation. This is where tracking maintenance costs becomes essential. You need receipts and records for every expense.

Keep every receipt for maintenance work. Oil changes, tire rotations, new brakes, windshield wipers, car washes for a work vehicle. Save them digitally using your phone or an app like Dext. Paper receipts fade and get lost. Digital copies survive and are searchable.

Record the date, amount, vendor, and what service was performed. A receipt that just says “$847.52 - Auto Shop” won’t help you in an audit. Note that it was brake pads and rotors so you can categorize it correctly.

Categorize expenses in your accounting software. Separate fuel from repairs from insurance. Your accountant needs this detail to prepare your return correctly. Businesses in transportation and logistics often have significant vehicle expenses, making proper categorization even more important for understanding true operating costs.

Calculate your business use percentage. If you drive 15,000 miles total and 10,000 are for business, your business use is 67%. You can only deduct 67% of your actual vehicle expenses. The IRS requires you to keep a mileage log that supports this percentage.

The mileage log is required regardless of which method you use. Record the date, destination, business purpose, and miles driven for every business trip. Apps like MileIQ automate this. Reconstructing mileage from memory at year-end doesn’t work and won’t hold up if audited.

What counts as deductible maintenance? Oil changes, tire replacement, brake work, tune-ups, repairs, fluid replacements, wiper blades, batteries. Basically anything that keeps the vehicle running in its current condition. Improvements that increase the vehicle’s value or extend its life might need to be depreciated instead of expensed immediately.

If you’re not sure which method is better for your situation, run the numbers both ways. High-mileage, low-cost vehicles often favor standard mileage. Expensive vehicles with high maintenance costs might favor actual expenses. You generally have to choose in the first year you use the vehicle for business and stick with it for that vehicle.

Keep records for at least three years after you file the return, though the IRS can go back further in some cases. A folder in your accounting software or cloud storage labeled by year and vehicle makes retrieval easy if questions come up later.

Most business owners underestimate how much their vehicles cost because they don’t track expenses properly. Whether you’re a contractor driving to job sites or a consultant meeting clients, those costs add up. Our Andover, MA advisory services can help you set up a tracking system that captures these deductions without creating extra work every week. Proper tracking turns vehicle costs into legitimate deductions instead of missed opportunities.