The Complete Guide to Mileage Deductions for Self-Employed

If you drive for your business — visiting clients, picking up supplies, going to job sites — every kilometre is a potential tax deduction. This guide explains exactly how mileage deductions work in Canada and the United States, what records you need, and how to avoid common mistakes.

Disclaimer: Mileage rates and rules change annually. Always verify current rates with the CRA or IRS and consult a tax professional.

What Counts as a Business Drive?

Both the CRA and IRS define business driving as travel related to earning income from your business. This includes:

• Driving to meet a client or customer
• Travelling to a job site or work location
• Running business errands (picking up supplies, dropping off deliveries)
• Driving between two separate work locations
• Attending a business conference or networking event

Commuting does not qualify. The drive from your home to a regular fixed office is personal — not deductible. However, if your home is your principal place of business (you have a legitimate home office), driving from home to meet clients may qualify.

Canada: How Mileage Deductions Work

The CRA does not offer a standard per-kilometre deduction for self-employed individuals. Instead, you deduct actual vehicle expenses multiplied by the business-use percentage of your vehicle.

Step 1 — Track all vehicle expenses

Keep receipts for: fuel, oil changes, insurance, repairs, registration, and lease payments (or CCA if you own the vehicle). These are claimed on T2125, Part 2.

Step 2 — Keep a mileage logbook

The CRA requires a logbook recording every trip: date, destination, odometer readings (start and end), and the business purpose. You also need total kilometres driven in the year (personal + business).

Step 3 — Calculate business-use percentage

Business km ÷ Total km for the year = Business-use %
Example: 12,000 business km ÷ 20,000 total km = 60%

Step 4 — Apply the percentage

Multiply your total vehicle expenses by the business-use percentage to get your deductible amount.

The CRA does publish a prescribed per-kilometre rate used for employee automobile allowances (check the CRA website for the current year's rate). Self-employed individuals use the actual-expenses method described above.

United States: How Mileage Deductions Work

Self-employed individuals in the US can choose between two methods. You must choose in the first year you use the vehicle for business.

Option A — Standard Mileage Rate

Multiply business miles by the IRS standard mileage rate. The rate for 2024 was 67 cents per mile (IRS Notice 2024-08). Check the IRS website or a current tax resource for the rate applicable to the year you are filing.

You cannot use the standard mileage rate if you have already claimed MACRS depreciation or Section 179 expensing on the vehicle.

Option B — Actual Expenses

Track all vehicle costs (fuel, insurance, repairs, depreciation) and multiply by your business-use percentage. Generally more work but may yield a larger deduction for high-cost vehicles.

Record-keeping for the IRS

The IRS requires contemporaneous records: date, business destination, business purpose, and miles driven for each trip. Apps or a paper logbook both work — the key is recording trips at the time they occur, not reconstructed later from memory.

Report vehicle expenses on Schedule C, Part II, Line 9 (car and truck expenses). You must also complete Part IV of Schedule C with vehicle details.

What TaxSort Tracks Automatically

TaxSort's GPS mileage tracker logs the start and end of each trip, records the route, calculates the distance, and stores it in your account — linked to the tax year. You can review and categorize trips as business or personal, then export your complete mileage log at tax time.

Key Tips

• Log trips immediately. Reconstructing a year of driving from memory will not hold up to an audit.
• Record the purpose. “Client visit — Sarah Chen, 123 Main St” is far better than “work.”
• Track total odometer readings. Both the CRA and IRS may ask for beginning and end-of-year readings.
• Do not claim 100% business use unless it is true. This is a common audit trigger.