Writing off a vehicle through your LLC
A vehicle is one of the more valuable deductions an LLC can take and one of the most frequently mishandled. The rules reward owners who keep clean records and penalize those who guess. The core decisions are which method to use, what mileage actually qualifies, whether to claim depreciation, and whose name the vehicle should be in.
This is general information, not tax advice. Mileage rates and depreciation limits change every year, so the figures here are framed for 2026; confirm current numbers and any large purchase with a CPA.
The two methods: standard mileage vs actual expenses
Business driving is deducted by one of two methods, and an owner picks one per vehicle.
- Standard mileage rate. Multiply business miles by the IRS rate for the year. The rate is meant to cover gas, maintenance, insurance, and depreciation, so those costs are not deducted separately. The only record needed is a mileage log.
- Actual-expense method. Add up every cost of operating the vehicle — gas, oil, repairs, insurance, registration, lease payments, and depreciation — then deduct the business-use percentage of that total. It is more paperwork but often produces a larger deduction for an expensive vehicle or a low-mileage, high-cost situation.
| Factor | Standard mileage | Actual expenses |
|---|---|---|
| Records needed | Mileage log | Log plus every receipt |
| Best when | High miles, modest vehicle cost | Expensive vehicle, lower miles |
| Depreciation | Built into the rate | Claimed separately |
| Effort | Low | High |
The switching rules
The two methods are not freely interchangeable year to year. To preserve the option to switch later, an owner generally must use the standard mileage rate in the first year the vehicle is placed in service. After that, it is usually possible to switch to actual expenses in a later year — but doing so requires using straight-line depreciation going forward. If actual expenses are chosen in year one, the vehicle is typically locked into that method for its life. A leased vehicle has its own rule: whichever method is chosen in the first year must be used for the entire lease.
Business miles vs non-deductible commuting
The most common error is deducting commuting. Driving between home and a regular place of business is a personal commute and is never deductible, no matter how far. What does qualify is travel for the work itself:
- Driving between work sites or job locations during the day.
- Trips to meet clients, vendors, or customers.
- Runs to the bank, post office, supply store, or a business errand.
- Travel to a temporary work location outside the usual area.
A qualifying home office can change the math: if the home is the principal place of business, trips from there to other work locations may count as business miles rather than commuting. The personal-use portion of any vehicle is always excluded.
The mileage log requirement
Whichever method is used, a mileage log is the foundation of the deduction. The standard mileage method needs it to count miles, and the actual-expense method needs it to establish the business-use percentage. A defensible log records, for each business trip, the date, the miles driven, and the business purpose, along with the odometer reading at the start and end of the year. A contemporaneous log — filled in as trips happen, often via a mileage app — carries far more weight than a year-end reconstruction. In an audit, the absence of a log is what most often sinks a vehicle deduction.
Section 179 and bonus depreciation
An owner using the actual-expense method can also deduct the cost of the vehicle itself through depreciation, and two provisions can accelerate that. Section 179 lets a business expense the cost of qualifying property in the year it is placed in service rather than spreading it out. Bonus depreciation allows an additional first-year write-off on qualifying property. Both apply only to the business-use percentage, and both require business use of more than 50%.
Ordinary passenger cars face annual depreciation caps (the so-called luxury-auto limits) that restrict how much can be written off each year. This is where the heavy-vehicle rule comes in: vehicles with a gross vehicle weight rating above 6,000 pounds — many large SUVs and trucks — sit outside the passenger-car caps and can qualify for a much larger first-year deduction, subject to a separate SUV limit. The rules are intricate and change with each tax act, so a large vehicle purchase planned around these provisions should be confirmed with a CPA before buying.
Calculating the business-use percentage
The business-use percentage is the engine behind the actual-expense method, and it is simply business miles divided by total miles for the year. If a vehicle is driven 30,000 miles and 21,000 of those are documented business miles, the business-use percentage is 70%, and 70% of gas, insurance, repairs, depreciation, and lease payments is deductible. The same percentage governs how much of the vehicle’s cost can be depreciated or expensed under Section 179. This is why the mileage log matters even for owners who never intend to use the standard rate: without a credible total-miles and business-miles figure, the percentage — and therefore the entire actual-expense deduction — rests on an unsupported guess. The percentage is recalculated each year, so a vehicle that was 70% business one year and 40% the next is deducted accordingly.
The 50% business-use threshold
Several of the most valuable provisions have a floor: the vehicle must be used more than 50% for business in the year it is placed in service to qualify for Section 179 expensing and accelerated depreciation. If business use is 50% or less, those fast write-offs are unavailable and the cost must be recovered using slower straight-line depreciation instead. Worse, if business use starts above 50% — unlocking the accelerated deduction — and then drops below 50% in a later year, the tax rules can require recapturing part of the deduction already taken, effectively clawing some of it back as income. An owner planning to lean on Section 179 for a vehicle should be confident the business use will stay above the threshold for the relevant period.
Leasing vs buying
The method interacts with the financing choice. With a lease, the actual-expense method deducts the business-use share of the lease payments (reduced by an income inclusion amount for higher-value vehicles), while depreciation does not apply because the business does not own the vehicle. With a purchase, the business can claim depreciation, Section 179, and bonus depreciation on the business-use portion. Leasing tends to favor steady, predictable deductions; buying favors a large up-front write-off when the heavy-vehicle rules apply. The standard mileage rate works with either.
Titling the vehicle: LLC vs personal name
Owners often assume the vehicle must be titled in the LLC’s name to deduct it. It does not. A single-member LLC is a disregarded entity for taxes, so a vehicle owned personally and used for business is deducted on the business return just the same. Titling in the LLC’s name can matter for liability reasons — keeping a business asset inside the entity — but it also brings commercial insurance requirements, potentially higher premiums, and financing complications. For many solo owners, holding the vehicle personally and tracking business use is simpler; an owner concerned about liability separation should weigh titling it in the LLC with proper commercial coverage.
A worked comparison
Suppose an owner drives 20,000 business miles in a year in a modestly priced car with $9,000 of total operating costs and 80% business use. Under the standard mileage method, 20,000 miles multiplied by the IRS rate produces the deduction directly — clean and requiring only the log. Under the actual-expense method, 80% of the $9,000 (plus the business share of depreciation) is deducted. For a high-mileage, lower-cost vehicle, the standard rate often wins because the per-mile rate outpaces the modest actual costs. Flip the facts — a $70,000 SUV driven 8,000 business miles — and the actual-expense method, paired with the heavy-vehicle depreciation rules, can produce a far larger first-year deduction. The lesson is to run both calculations before committing in year one, since the first-year choice constrains future options.
Common mistakes to avoid
- Deducting 100% of a personal vehicle. Almost no vehicle is used purely for business; claiming full use without a log inviting scrutiny.
- Reconstructing the log at year-end. A guessed-at log made the night before filing carries little weight; contemporaneous records win.
- Mixing both methods on one vehicle in the same year. A method is chosen per vehicle per year, not blended.
- Forgetting the first-year rule. Using actual expenses in year one can permanently lock out the standard rate for that vehicle.
- Assuming the LLC must own the car. For a single-member LLC, personal ownership still allows the deduction.
Recordkeeping that holds up
The deduction lives or dies on documentation. Keep the mileage log current, retain fuel and repair receipts if using actual expenses, record beginning and ending odometer readings each year, note the vehicle’s placed-in-service date, and run vehicle expenses through the business account where possible. A mileage app that timestamps trips automatically is the simplest way to produce a contemporaneous record. Consistent, dated records turn a vehicle deduction from an audit risk into a routine line item — and they are the single biggest factor in whether the deduction survives a review.
Frequently asked questions
Can an LLC write off a vehicle?
Yes. An LLC can deduct business use of a vehicle using either the standard mileage rate or the actual-expense method, chosen per vehicle. Only the business-use portion is deductible, and a mileage log is required either way. The vehicle does not have to be titled in the LLC's name to claim the deduction.
What is the difference between standard mileage and actual expenses?
The standard mileage rate multiplies business miles by the IRS rate for the year and covers gas, maintenance, insurance, and depreciation in one figure. The actual-expense method totals every operating cost and deducts the business-use percentage. Standard mileage suits high-mileage drivers; actual expenses often favor expensive or low-mileage vehicles.
Is commuting deductible for an LLC owner?
No. Driving between home and a regular place of business is a personal commute and is never deductible. Business miles — trips between job sites, to clients, or for business errands — do qualify. A qualifying home office can convert some trips from commuting into deductible business miles.
Do I really need a mileage log?
Yes. A mileage log recording the date, miles, and business purpose of each trip is the foundation of the deduction under either method. A contemporaneous log carries far more weight than a year-end reconstruction, and its absence is the most common reason a vehicle deduction is disallowed in an audit.
What is the heavy-SUV deduction rule?
Vehicles with a gross vehicle weight rating above 6,000 pounds fall outside the annual passenger-car depreciation caps and can qualify for a larger first-year deduction through Section 179 and bonus depreciation, subject to a separate SUV limit. The rules are detailed and change often, so confirm with a CPA before a large purchase.
Should I title my vehicle in the LLC or my personal name?
For a single-member LLC, titling does not change the tax deduction because the entity is disregarded — business use is deductible either way. Titling in the LLC's name can help separate liability but may require commercial insurance, raise premiums, and complicate financing. Many solo owners hold the vehicle personally and track business use.
Related guides
- LLC tax deductions
- How is an LLC taxed?