Method Comparison

Factor Mileage Actual
Calc Rate × business miles Gas, insurance, repairs, depreciation × business %
Records Mileage log Log + all receipts
Heavy SUV Capped by rate 179/bonus may dominate
Admin Light Heavy, higher audit proof

Pair with Tax Deductions, S-Corp, CapEx vs OpEx, and Year-End Planning.

Logbook Standard

  • App GPS + purpose at trip time; weekly review.
  • Separate business vs commuting; home-office principal-place memo where claimed — see Home Office.
  • Retain insurance, fuel, repair invoices for actual method.

Enforce reimbursement approval per QuickBooks vs Xero and file in Month-End Close.

Heavy Vehicle Note

GVWR >6,000 lbs may qualify for expanded 179; bonus phases apply. Confirm 2026 limits and state decoupling with CPA before December purchase — see Fixed Assets.

Worked Example: 18,000 Business Miles on a Sedan

Method Math Deduction
Mileage (68¢/mi illustrative — confirm 2026 IRS rate) 18,000 × $0.68 $12,240
Actual: gas $3,100 + insurance $1,800 + repairs $1,200 + depreciation $4,500 = $10,600 × 80% business $10,600 × 0.80 $8,480

Mileage wins by $3,760 — typical for high-mileage economical cars. Flip the facts (8,000 miles on a $70,000 SUV with $9,000 depreciation + $3,000 insurance): actual at 80% ≈ $13,600+ vs mileage $5,440. High cost-per-mile vehicles with low miles favor actual; always model both with the current-year rate and limits — see Fixed Assets and CapEx vs OpEx.

S-Corp Vehicle Strategies (Ranked)

  1. Corporate-owned, mostly business use. Company deducts actual costs + depreciation; personal miles become W-2 fringe (lease-value rules). Best when business % exceeds ~80% and the owner wants 179/bonus at the corporate level.
  2. Personal-owned + accountable-plan reimbursement. Owner deducts nothing personally; company deducts mileage reimbursements (tax-free to owner with proper substantiation). Best for mixed-use cars — avoids fringe math entirely.
  3. Personal-owned, no reimbursement. Worst of all worlds: no corporate deduction, no personal deduction (unreimbursed employee expenses are nondeductible post-TCJA). If this is your setup, switch to option 2 this month.

Whichever path, the logbook is identical: contemporaneous date, destination, business purpose, miles — GPS app plus weekly review. Reconstructed year-end spreadsheets fail sampling; auditors test a random month, and one fabricated month taints the year — see Audit Procedures.

Commuting vs Business: The Home-Office Key

Home → regular office = commuting (never deductible). Home office as principal place of business converts home → client trips into business miles. That single memo can reclassify thousands of miles — coordinate with the Home Office exclusive-use documentation. Temporary work locations (under a year) and second jobs have their own rules; overnight travel follows the travel-meals playbook — see Business Meals.

FAQ

Can we switch methods later?

Generally mileage to actual is restricted once actual depreciation claimed; actual to mileage has limits. Choose with 3-year view.

What about personal use?

Include fringe value in wages if corporate-owned; document business % for all methods.

Next Steps

  1. Start GPS log this week; backfill with calendar only once.
  2. Model both methods on YTD miles and costs.
  3. Lock reimbursement policy before year-end.