Understanding Tax Deductions for Vehicle Expenses: A Guide for Freelancers and Self-Employed Individuals

In this week’s edition of Ask the Tax Editor, Joy Taylor of The Kiplinger Tax Letter addresses a series of questions from readers concerned about vehicle expense deductions and the nuances involved for different tax situations. Below, we break down key points regarding mileage, depreciation opportunities, and the implications of recent tax law changes.

1. Mileage Deduction for Independent Contractors

Question: A retired individual who works part-time as a basketball referee wants to know if they can deduct the standard mileage allowance for their travels to game sites as an independent contractor filing Schedule C.

Joy Taylor's Response: Generally, the IRS does not allow the deduction of commuting costs. For independent contractors, the mileage incurred traveling from home to the first game site and returning home from the last game site is considered nondeductible commuting. However, you can claim mileage between different game sites if you're working multiple locations in a day.

When claiming deductions, you have the option to deduct either actual expenses such as gas and maintenance or utilize the standard mileage rate, which is 72.5 cents per mile for the first half of 2026 and rises to 76 cents per mile from July onward. Additionally, any tolls or parking fees can be included in your claim if you're using the standard mileage rate.

It’s essential to maintain a detailed mileage log for accurate record-keeping, which will assist with your tax return preparation and substantiating your deductions.

2. Deduction Limitations for Employees

Question: An employee who receives a W-2 and drives their personal car for work tasks wants to know about deducting mileage expenses since their employer does not reimburse them.

Joy Taylor's Response: Unfortunately, employees can no longer claim unreimbursed business expenses as deductions. This change stems from the 2017 Tax Cuts and Jobs Act, which suspended miscellaneous itemized deductions through 2025, including those for unreimbursed work-related driving. This is a significant shift since prior to 2018, employees could deduct unreimbursed auto expenses if they itemized deductions on Schedule A, provided those costs exceeded 2% of their adjusted gross income.

3. Expensing a Large Pickup Truck

Question: A reader asks whether they can expense the entire cost of a large pickup truck purchased for business purposes under Schedule C.

Joy Taylor's Response: Yes, self-employed individuals can expense the total cost of a qualified large truck when used 100% for business. However, Section 179 imposes limitations; specifically, the total expense deduction cannot exceed the business's taxable income. It’s worth noting that while the Section 179 deduction has this limit, first-year bonus depreciation offers a way around it, since it does not impose a taxable income cap the same way.

4. Tax Deductions for New Business Vehicles in 2026

Question: A self-employed person asks about depreciation deductions for a vehicle used entirely for business purposes purchased in 2026.

Joy Taylor's Response: There are favorable tax deductions for vehicles first put into service in 2026. For automobiles that qualify for first-year bonus depreciation, the deduction can reach up to $20,300 for both new and used passenger vehicles. Subsequent depreciation limits for those vehicles in the second and third years are capped at $19,800 and $11,900, respectively, followed by a decline to $7,160 in later years.

• If you opt not to take bonus depreciation for passenger vehicles, the first-year cap is $12,300.
• Heavy SUVs qualify for a full write-off through bonus depreciation.
• For large pickup trucks, the entire cost may also be expensed, which underscores the importance of planning for your taxable income as you navigate these deductions.

About Ask the Editor, Tax Edition

Readers can submit tax questions for Joy Taylor's review in various Kiplinger publications, including The Kiplinger Tax Letter, The Kiplinger Letter, and The Kiplinger Retirement Report. Each inquiry contributes to a growing resource of insights as tax policies evolve and impact taxpayers differently.

For comprehensive responses and continual updates regarding key tax issues—like those emerging from recent legislation—consultations with a qualified financial or tax advisor are recommended to ensure clarity and accuracy in applying these complex rules.

This Q&A aims to clarify common tax queries, helping readers understand potential deductions, remain compliant, and maximize their tax benefits.