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Mileage tracking and common write-offs for contractors

Contractors drive. Job sites, supply houses, the dump, estimates. Those miles can count as a business expense, but only with records to back them up.

This guide covers what the IRS says about business mileage for the self-employed, and the common types of business expenses it lists. It won't tell you what to deduct. That's your CPA's job.

The basic rule for business expenses

The IRS says a business expense must be both ordinary and necessary to be deductible (IRS Publication 334):

  • Ordinary means common and accepted in your field.
  • Necessary means helpful and appropriate for your business.

Business use of your vehicle

The IRS says self-employed people can deduct business use of a car. If you use it for both business and personal driving, you can deduct only the business part (IRS Topic 510).

There are generally two methods (IRS Topic 510):

Standard mileage rate

You multiply business miles by the IRS rate. The IRS lists conditions for using it (IRS Topic 510), including:

  • You own or lease the vehicle.
  • You don't operate five or more vehicles at the same time, as in a fleet.
  • For a car you own, you choose the standard rate in the first year the car is used in your business.
  • For a leased car, if you choose it, you use it for the whole lease.

There are other conditions about depreciation methods. Read the full list on IRS Topic 510.

Actual expenses

You add up what it costs to run the vehicle and deduct the business share. The IRS lists gas, oil, repairs, tires, insurance, registration fees, licenses and depreciation or lease payments (IRS Topic 510).

With either method, the IRS says business parking fees and tolls are deductible separately (IRS Topic 510).

The 2026 IRS standard mileage rate

For 2026, the IRS set two business rates, one for each half of the year (IRS: Standard mileage rates):

  • January 1 – June 30, 2026: 72.5 cents per mile
  • July 1 – December 31, 2026: 76 cents per mile

Rates change. Always check the IRS standard mileage rates page for the year you're filing.

Which drives count

The IRS describes local business transportation as including getting from one workplace to another, visiting clients or customers, and, in some cases, getting from home to a temporary workplace (IRS Publication 334). The rules on home, "tax home" and regular workplaces have details. Go over your own driving with your CPA.

Keep a log

The IRS says you must back up car expenses with adequate records or sufficient evidence (IRS Topic 510). In practice, a mileage log usually shows the date, where you went, why, and the miles. Ask your CPA what they want to see.

How long to keep it: the IRS says generally until the period of limitations for that return runs out, which is often 3 years, and longer in some cases (IRS: How long should I keep records?).

Common business expense types

IRS Publication 334 lists many types of expenses a business may be able to deduct, including (IRS Pub. 334):

  • Car and truck expenses
  • Employees' pay
  • Insurance
  • Advertising
  • Bank fees
  • Licenses and regulatory fees
  • Repairs and maintenance
  • Supplies and materials
  • Utilities

It also lists things you usually can't deduct as business expenses, such as entertainment expenses and dues to social clubs. Whether any item applies to you depends on your facts. Ask your CPA.

How Banay OS handles mileage and receipts

Banay OS™ keeps records. It doesn't decide what's deductible.

  • Mileage is off until the owner turns it on, and each driver sees and accepts a notice first. After that, Banay OS records drives only while you're clocked in and inside work hours your company sets. Nothing is recorded when you're clocked out or outside those hours. Location is recorded only while you're clocked in. The owner and the office or admin users you choose can see it; crew see only their own. Route points are deleted after 90 days by default (your company can choose 7 to 90 days); trip records stay for your mileage log.
  • Snap a receipt and it's filed to the job.

See receipt and mileage tracking in Banay OS.

FAQ

What is the 2026 IRS standard mileage rate for business?

72.5 cents per mile for January 1 – June 30, 2026, and 76 cents per mile for July 1 – December 31, 2026 (IRS).

Can I use both the standard rate and actual expenses?

For a car you own, the IRS says you must choose the standard rate in the first year the car is used in your business; later years you can choose either. For a leased car, choosing the standard rate means using it for the whole lease. Parking and tolls for business are separate under either (IRS Topic 510). Ask your CPA which fits.

Do I need a mileage log?

The IRS requires adequate records or sufficient evidence for car expenses (IRS Topic 510). A log is the usual way.

Does Banay OS tell me what to deduct?

No. It keeps receipts and trip records organized. Your CPA decides what's deductible.

Get started with Banay OS

When you're ready to keep records on every job, join the early-access waitlist. You can also visit the Banay OS home page or see plans.

Sources (fetched Oct 21, 2026):