Is Tracking Mileage Worth It for Your Business? Here’s What You Need to Know
If your business involves a lot of driving—whether you’re a cleaner, landscaper, contractor, or any other type of service provider—you’re probably using a fleet of vehicles daily. With the rising costs of running a business, you might be wondering: Is tracking mileage worth the effort? The answer is not always straightforward, but by the end of this post, you’ll have a clear understanding of how tracking mileage can benefit your business financially, especially when it comes to tax time.
Mileage vs. Actual Expenses: Which Should You Choose?
Before we dive into the benefits of tracking mileage, let’s address a common tax question: Should you deduct mileage or actual expenses? The IRS allows businesses to choose between deducting either the standard mileage rate or the actual expenses of running a vehicle, such as gas, insurance, repairs, and depreciation. But you can’t do both.
Why? Because the standard mileage rate already includes many of those expenses. Think of it this way: it’s like ordering dessert twice and expecting a freebie just because you’re craving cake—it’s a double-dip situation the IRS doesn’t allow.
A key thing to remember is that if you pick the mileage deduction method in the first year, you can switch methods in future years. However, if you start with actual expenses, you’re locked in for the life of that vehicle. So, make sure to consult your tax professional to choose the method that best suits your business.
Why Tracking Mileage is a Game Changer for Your Business
Let’s say your fleet drives 50,000 miles a year. In 2025, the standard mileage rate is 70 cents per mile. That’s a $35,000 deduction just from tracking your mileage—without needing to sift through receipts for gas, insurance, or repairs.
But what if you’ve just bought a new vehicle? In 2025, bonus depreciation allows you to deduct up to 40% of the cost of a new vehicle, which can be a significant tax advantage. However, beware of complications: If you’ve already claimed depreciation and then total your vehicle in an accident, you could be required to repay the depreciation deductions you’ve already taken. This can create an unwelcome tax burden, so be cautious.
What Information Do You Need for a Mileage Deduction?
When it comes to mileage deductions, the IRS loves specifics. Here’s a list of the key information you’ll need to track:
Mileage for each business trip
Total mileage for the year (business + personal)
Date, destination, and purpose of each trip
Odometer readings at the beginning and end of the year
For example, you might note: “12/5, Bean & Breek Coffee, meeting with potential client Michelle Smith to discuss tax needs.” It’s that simple! Keeping detailed records is much easier than explaining your trips during an audit.
Best Ways to Track Mileage
While you can always go old-school and manually log mileage, there are modern solutions that make tracking mileage effortless. One such option is the MileIQ app, which automatically tracks your drives for about $50 per user per year. The app lets you swipe left for personal trips and right for business-related ones, generating neat reports at the end of each month. It’s a low-effort way to stay on top of your mileage tracking—and for employees using personal vehicles for work, it makes mileage reimbursements easy too.
How Tracking Mileage Benefits Your Bottom Line
Beyond tax savings, tracking mileage is an essential component of cost management for your business. Keeping tabs on your vehicle’s usage can help you pinpoint inefficiencies and identify areas where costs may be rising. For example, you might discover certain routes are more fuel-inefficient, or that certain vehicles are consuming more gas than others. This allows you to optimize your operations and reduce unnecessary expenses over time.
Additionally, understanding how much you’re driving and which vehicles are racking up the miles will help you better forecast maintenance costs and plan for future repairs or replacements.
Final Thoughts: Is Tracking Mileage Worth It?
So, is tracking mileage worth the time and effort? In many cases, the answer is yes—especially if your business involves a lot of driving. Mileage tracking can simplify your accounting, save you money at tax time, and help with long-term cost management. It’s an easy way to maximize your deductions without the hassle of gathering a year’s worth of receipts.
That said, every business is different. If you’re unsure which method of vehicle expense deduction makes the most sense for you, be sure to consult with your tax professional to determine the best approach for your situation.
Need help navigating your mileage deductions or have more questions? Contact your trusted tax pro (that’s me!) for personalized advice that keeps your business running smoothly and profitably.
