How to Write off your Vehicles in 2025
As a business owner, every dollar counts — and that includes the money you spend on your vehicles. Whether you’re meeting clients, making deliveries, or managing a small fleet, your car or truck can be one of your biggest tax-saving opportunities.
The key is understanding how to properly deduct those vehicle expenses — and in 2025, those deductions can make a serious difference in your bottom line.
Let’s break it down step by step.
Why Vehicle Deductions Matter
When used strategically, vehicle deductions can help you:
Reduce taxable income
Improve cash flow
Recover part of your vehicle operating costs
Legally minimize your tax burden
But here’s the catch: you can’t just guess or estimate your vehicle use. The IRS requires documentation, and choosing the right deduction method can make or break your savings.
Option 1: The Standard Mileage Rate
The standard mileage rate is often the simplest way to deduct business driving.
Each year, the IRS sets a rate per mile driven for business purposes — and for 2025, it’s expected to hover around 60–70 cents per mile.
That single rate covers gas, maintenance, depreciation, and insurance.
To use this method effectively:
Track every business mile driven.
Use a mileage tracking app that automatically logs trips.
Separate business and personal drives clearly.
Accurate logs make your deductions audit-proof and save you from headaches later.
Option 2: The Actual Expense Method
If your vehicle is expensive to operate or you drive less for business, the actual expense method might yield bigger savings.
This method lets you deduct the business-use portion of all actual expenses, including:
Gas and oil
Repairs and maintenance
Insurance premiums
Registration fees and licenses
Lease payments (if applicable)
Depreciation (for owned vehicles)
Pro Tip: Use a dedicated business credit card for vehicle expenses — it simplifies tracking and ensures you never mix personal spending with business costs.
Which Method Is Right for You?
Here’s a quick rule of thumb:
If you drive a lot of miles, the standard mileage rate may be easier and just as rewarding.
If you have a newer or high-cost vehicle with significant expenses, the actual expense method often provides a greater deduction.
It’s worth calculating both methods — or better yet, have a CPA review which one maximizes your tax benefit.
Special Considerations for 2025
Heavy SUVs and Trucks
Vehicles weighing over 6,000 pounds (GVWR) can qualify for Section 179 expensing and bonus depreciation.
This means you could deduct a large portion — sometimes the entire cost — of your vehicle in the year it’s placed in service.
This strategy can drastically lower your taxable income, but specific rules apply. Professional tax guidance is essential.
Leased Vehicles
Lease payments are deductible, but high-value vehicles may trigger inclusion amounts that reduce your deduction. This rule keeps luxury vehicle deductions fair.
Personal vs. Business Use
Only the business-use portion of your vehicle is deductible.
If your car is used 70% for business and 30% personal, only 70% of your expenses can be deducted.
A mileage log or tracking app is critical for proving this ratio.
Commuting Rules
Traveling from home to your main office doesn’t qualify as a business expense.
However, if you have a qualified home office, trips from home to other business locations are deductible.
The Importance of Recordkeeping
The foundation of any successful tax deduction is strong documentation.
Keep:
Mileage logs or app reports
Receipts for all expenses
Proof of business use percentages
With organized records, you’ll be prepared for tax time — and fully protected in case of an IRS review.
Example Scenario
Imagine a consultant who drives 15,000 miles annually for client meetings.
Using the standard mileage rate at $0.67/mile, that’s a $10,050 deduction — instantly lowering taxable income.
Now imagine a business owner with a new SUV over 6,000 pounds using Section 179. Depending on eligibility, they might deduct the full cost of the vehicle in the first year.
The difference? Thousands of dollars in savings.
The Financial Benefits of Planning Ahead
Understanding vehicle deductions isn’t just about compliance — it’s about strategy.
When managed correctly, your car becomes not just a tool, but a tax advantage.
Working with a professional can help you:
Select the best deduction method
Set up efficient record-keeping systems
Maximize every eligible write-off
Plan proactively before tax season
Conclusion
Don’t wait until filing time to figure out your vehicle deductions. The earlier you plan, the more you can save.
For expert help in navigating your 2025 tax strategy, contact the professionals at Guerrero CPA today.
📞 Call 210-490-7100 — that’s 210-490-7100.
Or visit www.guerrerocpa.com to schedule a consultation.
At Guerrero CPA, we help business owners drive toward greater financial success — one smart deduction at a time.