FAQ: What Are the IRS Requirements for Fleet Mileage Logging?

Harvesting data about your fleet, both at an aggregate level and at a more specific per-vehicle and per-driver level, is a critical element of managing a fleet for a business. Much of this data can be harvested automatically using telemetry-tracking devices and apps, but some needs to be recorded more manually.

This data is also used in a variety of ways. Vehicle speed and velocity changes can indicate aggressive driving, vehicle performance and gas mileage can indicate a need for proactive maintenance, and even raw telemetry data can be used for overall analytics that can help right-size and adjust your fleet for optimum return on investment.

So, it stands to reason that tracking mileage is a good idea. In fact, you probably already do it for calculations like gas mileage. But, there’s another purpose for tracking mileage, on a more granular level: per-trip, per-vehicle, on business only. What is that purpose, how can you make use of it, and is it worthwhile to do so? Let’s discuss.

Should Your Fleet Track Mileage?

First of all, the big question. Should you track your mileage in the first place?

The answer to this is an unequivocal yes. There are many possible uses for tracking mileage, both across the whole of your fleet, for individual vehicles, and for individual trips.

• You can calculate fuel mileage and utilization, which can help you ensure no vehicles are being over- or under-utilized, and that no fuel theft is occurring.
• You can evaluate if any vehicles need to be used more, used less, or even replaced.
• You can track the utilization of parts and schedule proactive maintenance for things like oil changes, tire replacements, and inspections more consistently in line with usage.

There’s also one significant benefit you can get out of tracking mileage, but it’s a specific kind of mileage tracking that goes beyond just checking how many miles a vehicle is driven each day, week, month, or year.

What Are the Benefits of Tracking Mileage per Trip?

The biggest benefit of what we’re talking about today is financial. When you track the mileage of your vehicles used for business purposes, you can write off that mileage as a deduction on your taxes. That allows you to save money, which can be reinvested in the business.

The trick is that you need to track mileage in a specific way, so you have specific data you can submit to the IRS. You aren’t just tracking the amount of miles your vehicles have driven in a year; you’re tracking the amount of miles they drive for business usage. For some vehicles that may be just about every mile driven; for others it might only be partial usage.

This is important to consider, especially if you’re in a non-standard fleet situation. For example, if your fleet is a hybrid model made up of company-owned vehicles and employee-owned vehicles and owner-operators, you may reimburse your employees for miles driven for business purposes. Miles driven for personal purposes, to and from work, and other uses aren’t deductible.

Is Tracking Mileage Required by the IRS?

No. The IRS does not specifically require that a fleet track its mileage, either in sum total or for business usage. 

However, if you want to gain the benefits of mileage record deductions, you will need to track that mileage. Otherwise, you commit tax fraud, and the IRS certainly does not look kindly upon that sort of practice.

Many fleets will drive somewhere between 30,000 and 100,000 miles per truck per year. For a fleet with a dozen vehicles, that’s quite a significant number of miles. Deducting some monetary value per mile means it can add up quickly. We’ll discuss this in greater detail next.

What is the IRS Standard Mileage Rate?

If you choose to deduct business mileage from your business taxes, you need to choose how you want to do it. There are two options. You can use the standard deduction, or you can use the actual expenses method. First, let’s talk about the standard deduction.

The standard deduction is a fixed monetary value assigned per mile that can be deducted. Mileage can be broken down into five categories, which is why you need to be accurate in tracking the purpose of the miles driven.

• Use for Business or Self-Employment Purposes
• Use for Charity Purposes
• Use for Medical Purposes
• Use for Military Moving Purposes
• Other Usage

The specific values set for each of these can change from year to year. However, there are a few details that make this a little simpler to calculate. Both the medical use and the military moving use are considered the same category and assigned the same value. Other usage not listed in one of the four main categories is assigned a value of $0. So, functionally, you only have three numbers to consider.

Charitable use has remained steady for the last ten years at a fixed 14 cents per mile.

Medical and Moving use has varied up and down. In 2014, it was 23.5 cents; in 2017, it was 17 cents. In 2023 it was 22 cents, and in 2024 it was 21 cents.

Business use also changes from year to year but has trended upwards rather than bounced around the same point. In 2012, it was 55.5 cents; in 2017, it was 53.5 cents. In 2019, it was 18 cents, and in 2023, it was 65.5 cents. In 2024, it was 67 cents.

There are also the occasional complications. For example, in 2022, the values changed in the middle of the year. This is an unusual circumstance, but it means that some mileage in that year counts for a different value than other mileage.

Fortunately, the IRS makes it easy to see what the mileage deduction values are, on this page. Make sure to refer to it when filing your business taxes with mileage in hand.

To use a simple example, imagine a fleet that has ten vehicles. Each vehicle is driven for 5,600 miles per month, for a total of 56,000 per month, or 672,000 miles per year. At the 2024 standard deduction of 67 cents per mile, that offers a potential tax deduction of $450,240 for the fleet as a whole. That’s a significant chunk of change!

What is the Actual Expenses Method?

One of the benefits of the IRS standard deduction is that it makes things quite easy. You track your mileage, assign the amount of miles driven for business purposes, and deduct those miles from your taxes. 

What some fleets discover, though, is that this isn’t necessarily the best option. The Actual Expenses option is a different kind of calculation, and is more complex to perform, but can potentially come out ahead.

For this method, you need to track several pieces of data.

• The total mileage put on the vehicle in a year.
• The total amount of that mileage used for business purposes.
• The costs incurred by the vehicle over the year, including fuel, maintenance, repair costs, and depreciation. This can also include lease payments, insurance payments, registration fees, and more.

The way this deduction works is that you first determine what percentage of the usage of the vehicle was business usage. An employee vehicle used for 30% business use and 70% personal use would have a 30% deduction rate. A fleet-owned vehicle with 95% business use and 5% non-business use would have a 95% deduction rate.

Then, you tally up the operating costs. The sum cost of fuel used by the vehicle, the sum cost of maintenance – including both routine and non-routine maintenance – and the cost of repairs, as well as the depreciation of the vehicle according to an IRS standard depreciation schedule. 

The sum total of these costs is then calculated using the percentage. As a very simple example, if your vehicle costs $10,000 to operate for the year, and you had a 50% deduction rate for it, you would be able to deduct $5,000 from your taxes for that vehicle.

This is obviously a much more complicated method of deducting from your taxes, which is part of why the IRS provides the standard deduction option. In fact, most of the time, the standard deduction is going to be worth more to the business than a more itemized deduction method using actual expenses.

The actual expenses method is best used when the expenses of running the vehicle are high. An older vehicle with a need for more and costlier repairs will benefit more from the actual expenses model.

How Do You Pick the Right Method?

One important note is that the first year a vehicle is used for business is critical. If you choose to use the standard deduction, you can switch back and forth in subsequent years for whichever option makes the most sense that year. On the other hand, if you use the actual expenses method in your first year, you must keep using that method in future years. Keep this in mind, and plan for the future.

To determine which method is the best, it’s ideal to keep all of the records necessary to calculate both options. 

For example, imagine a scenario where a vehicle is used for 10,000 miles, half of which (5,000, or 50%) are business miles. This vehicle also cost $9,500 to operate throughout the year.

At the standard deduction of 67 cents for 2024, this vehicle would have a deduction of $3,350. However, using the actual expenses deduction option, the vehicle would deduct 50% of the costs, or $4,750. 

If the same vehicle paid off its lease, got cheaper insurance, and ended up with operating costs of $5,000 for the next year, 50% of that would be $2,500, making it less valuable than the standard deduction. This is why it can be critical not to lock yourself into one or the other, even if the first year might not be as much of a deduction for you.

What Information Does the IRS Require in a Mileage Log?

The mileage log you maintain has to be detailed enough to prove the business usage of the vehicle. To this end, you need to provide several pieces of data.

This data includes:

• Total mileage driven in the vehicle over the course of the year, including both business and non-business use.
• Total mileage driven for business use for that vehicle.
• Per-use mileage; the amount of miles driven in each use, specifically (not an average or generalization).
• Per-use information, including the date of the use, the destination of the vehicle, and the purpose of the trip.

All of this data can then be used to fully determine what usage is and isn’t deductible. For example, commuting to and from a job site isn’t deductible, but use in that job site and for business purposes is.

You can, but are not required to, maintain records that can help prove this usage, such as expense receipts, GPS logs, and more. In the event that you are audited, this will be helpful in proving your claims.

Can You Use a Mileage Tracking App?

Yes. There are many modern mileage-tracking apps. Some of them are meant for individual use, such as for ride-sharing drivers and couriers. Others are meant for business use and are linked to your fleet management platform.

Regardless, the IRS does not care how you track the information so long as you actually track it. Some fleets still use paper logs, and that’s allowed as well.

Do You Need to Retain Mileage Logs?

Yes and no. You are not legally required to retain your mileage logs; however, it’s critical information to have on hand in the event that the IRS decides to audit you.

Generally, the IRS recommends retaining information for three years; any claims older than that are dramatically unlikely to be audited. 

What is the Risk of Being Audited Over Mileage Deductions?

Quite low. Mileage deductions are extremely common, and the IRS has a good idea of how accurate deductions are. Unless you’re trying to deduct a wildly implausible amount of mileage or there’s an issue with your paperwork, you are unlikely to be audited. 

Want to save money on your maintenance and make the standard deduction the more valuable option? One way to do so is to work with us. At Epika, our national network of fleet service providers can help keep your vehicles in tip-top shape so operating expenses are as low as possible. All you need to do is find your nearest service provider to get started.

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