What receipts and records do I need for business vehicle and mileage expenses?

Whose records are these, and what do both methods rest on?

This covers costs you deduct as a self-employed person. Publication 463 says the cost of using your car as an employee can no longer be claimed as an unreimbursed employee travel expense (a miscellaneous itemized deduction), though Armed Forces reservists, qualified performing artists and fee-basis state or local government officials can still deduct unreimbursed employee travel expenses as an adjustment to total income; how a business employing you, even your own corporation, reimburses you is a separate question.

Publication 463 says you can generally figure car expenses by one of two methods: the standard mileage rate (the per-mile method) or actual car expenses. The temporary Treasury regulation 26 CFR 1.274-5T treats an automobile as listed property and allows no deduction for it unless you substantiate each element of the expenditure or use. 26 CFR 1.274-5 says these substantiation requirements don't apply to a qualified nonpersonal use vehicle, as that regulation defines the term. 26 CFR 1.274-5 says a mileage rate doesn't relieve you of substantiating each use's business mileage, time and business purpose, and the temporary regulation's return questions for any vehicle deduction ask for total, business, commuting and other personal mileage. So both methods rest on the trip log and total-miles evidence.

Publication 463 says that in a year you use the standard mileage rate you can't deduct actual car expenses such as depreciation, lease payments, repairs, gasoline or insurance, and suggests figuring the deduction both ways if you qualify for both methods; keep actual-cost documents until you have chosen your method for the year.

What must each trip entry contain?

The temporary regulation names these elements for a vehicle:

• Expenditures. Each separate cost must be shown, such as acquisition, improvements, lease payments, and maintenance and repairs. On the per-mile method, which 26 CFR 1.274-5 authorizes in lieu of substantiating actual costs, this element covers only costs deducted on top of the rate, such as business parking and tolls.
• Uses. The miles of each business use must be shown, and so must the vehicle's total use for the period.
• Time. The date of each expenditure or use must be shown.
• Business purpose. The business purpose of each expenditure or use must be shown.

It says the record must contain sufficient information on each element of every business use, though the level of detail can vary with the facts and circumstances. In its example, a truck also used personally, whose only business use is deliveries on an established route, can meet the requirement with the year's total miles, the route's length recorded once and each trip's date recorded at or near the time.

Record where you went on each trip: the temporary regulation's corroboration rule names the place of a use alongside its amount and date, and Publication 463's sample log has a destination column.

The temporary regulation generally requires a written statement of business purpose, except where it is evident from the surrounding facts and circumstances. It lets a round trip or uninterrupted business use go on one record, treats a de minimis personal stop, such as lunch between two business stops, as no interruption, and generally requires a written record, accepting one kept in a computer memory device with a logging program.

A single yearly total fails, showing no individual use, date or purpose, and Publication 463 says you can't deduct amounts that you approximate or estimate.

When must each entry be made, and how is a rebuilt log treated?

For a log to be an adequate record, the temporary regulation says each entry must be made at or near the time of the use: while you still have full present knowledge of each element, which a weekly log accounting for the week's use meets. It doesn't require a contemporaneous log, but says a timely record backed by documentary evidence has credibility that a later statement, made when recall is generally inaccurate, lacks.

A log rebuilt at year end from calendars and memory is such a later statement; the temporary regulation says its corroborating evidence must have a high degree of probative value to reach a timely record's credibility. Without substantial compliance for an element, it requires your own detailed statement plus other corroborating evidence, which for the cost or amount, time, place or date of an expenditure or use must be direct, such as written statements or witness testimony, or documentary. It allows circumstantial evidence for the business purpose of an expenditure. A rebuilt log's miles and dates still need direct or documentary evidence.

Two narrower routes in the temporary regulation need records that were kept:

• Sampling. An adequate record for part of the year can support all or part of it if other evidence shows the recorded periods are representative, but not for an employer's vehicle made available to more than one employee.
• Lost records. If you establish that you can't produce adequate records because they were lost through circumstances beyond your control, such as fire, flood, earthquake or other casualty, you have a right to substantiate by reasonable reconstruction.

So write trips up the same day, or at least weekly.

How do you show the business share of a vehicle you also drive personally?

Publication 463 figures the business-use percentage by dividing the year's business miles by the total miles driven for any purpose. The log gives the business miles; the total needs its own evidence, because the temporary regulation requires proof of total use.

Log odometer readings on the first and last day of the year and whenever business use starts or stops, so the total can be checked. Publication 463's sample weekly expense record says the division between business and personal expenses may be made at the end of the year; keep that calculation with the log.

Example: the odometer reads 41,250 on January 1 and 59,250 on December 31, so total use is 18,000 miles. Logged business miles add up to 11,700, a business share of 11,700 ÷ 18,000 = 65%.

If a car goes from only personal to business use mid-year, Publication 463 multiplies the business share after the change (business over total miles for that period) by the months of business use over 12, so take a reading that day.

Which purchase, loan and lease documents do actual costs need?

Publication 463 says that to depreciate a car you own on actual costs you generally need its basis, the date you placed it in service, and the depreciation method and recovery period. Keep these:

• Purchase contract or bill of sale. Publication 463 says basis is generally cost, including any amount you borrow or pay in cash, other property or services, and that cost includes sales taxes, destination charges and dealer preparation.
• Trade-in papers and the old vehicle's file. Publication 463 treats a car traded in during 2025 as disposed of at the trade-in and makes the new car's depreciable basis the old car's adjusted basis, figured as if 100% of its use had been for business, plus any additional amount paid, so the old car's cost and depreciation records support the new one.
• Improvement invoices. Publication 463 says substantial improvements, such as adding air conditioning or a new engine, increase basis.
• Basis-reduction records. Publication 463 decreases basis by any section 179 deduction, special depreciation allowance, gas guzzler tax and vehicle credits claimed, and by the special allowance even if unclaimed, unless you elected not to claim it, so keep a copy of any such election. It says section 179 records must identify the property and show how and from whom you acquired it and when you placed it in service.
• Loan agreement and interest statements. Publication 463 lets a self-employed person deduct the part of the interest that represents business use.
• Conversion evidence, if the car was personal first. Publication 463 places it in service on the conversion date, with a depreciation basis of the lesser of its fair market value or adjusted basis then.

Keep the purchase set on the per-mile method too: Publication 463 reduces basis, but not below zero, by a set rate per mile for all miles claimed at the standard mileage rate. Whether the business or you personally should hold the vehicle is a separate question.

What replaces them for a leased vehicle?

The lease agreement replaces the purchase and loan papers. Publication 463 says that on actual costs you can deduct the business part of each lease payment, not the personal part such as commuting, and must spread advance payments over the entire lease period. It adds that you can't deduct payments you make to buy a car, truck or van, even if called lease payments; whether an agreement is really a purchase is a separate question, and if it is, keep the purchase and loan records above.

For a lease of 30 days or more, Publication 463 says you may have to reduce the deduction by an inclusion amount, figured from part of the vehicle's fair market value on the first day of the lease term (the capitalized cost, if the agreement specifies it), your business and investment use percentage, and the lease days in the year. Keep the agreement showing its start date, term, capitalized cost and payment schedule, and a record of each payment.

Which running costs need a receipt, and when is other proof enough?

Publication 463 says actual car expenses include depreciation, lease payments, registration fees, licenses, insurance, repairs, gas, garage rent, tires, oil, tolls and parking fees, and that you generally must have documentary evidence, such as receipts, canceled checks or bills, to support your expenses. Two of its exceptions can reach vehicle costs: an expense, other than lodging, of less than $75, and a transportation expense for which a receipt isn't readily available. It says documentary evidence is ordinarily adequate if it shows the amount, date, place and essential character of the expense.

An exception removes the receipt, not the record: Publication 463 says to keep the proof in a log or similar record plus documentary evidence that together support each element. A card or bank statement line isn't enough: Publication 583 says proof of payment alone does not establish entitlement to a deduction, and to keep documents such as credit card sales slips and invoices showing you incurred the cost.

The temporary regulation lets a year's fuel and repair costs be aggregated, with the date and amount established but not each expenditure's business purpose, and prorated by the vehicle's total business use.

On the per-mile method, Publication 463 still allows business-related parking fees and tolls, but says fees to park at your place of work are nondeductible commuting expenses; which trips count as business is a separate question. For a self-employed person it also allows the business part of car-loan interest and of state and local personal property taxes on the vehicle. Receipt rules for business expenses in general are a separate question.

What goes in the vehicle file under each method?

One vehicle's file looks like this ("$75 or more" reflects Publication 463's under-$75 exception; its transportation exception can also apply):

The temporary regulation says the log need not repeat what a receipt shows, so long as the two complement each other in an orderly manner.

Setting this file up in accounting software is a separate question.

How do you keep records for more than one vehicle?

Keep a separate log, total-miles evidence and cost file for each vehicle, and mark each receipt with its vehicle: the temporary regulation states the cost element per item of listed property, and Publication 463 figures business use car by car.

If you own or lease five or more cars used for business at the same time, Publication 463 bars the standard mileage rate for all of them, though actual expenses for operating each may be deductible. It says alternating use isn't use at the same time, as when a salesperson alternates three cars and two vans; dated logs for each vehicle show the alternation.

How long must vehicle records be kept, and can scans replace paper?

The IRS page "How long should I keep records?" says you generally keep records supporting an item on a return until that return's period of limitations runs out; its periods run from filing unless stated otherwise, and a return filed early counts as filed on the due date:

The same page says to keep records relating to property until the period of limitations expires for the year you dispose of the property, because they are needed to figure depreciation and the gain or loss. Publication 583's asset records include depreciation taken and how you used the asset, and Publication 463 says you must keep records of your car's business use for each year of the recovery period. So keep these until the period of limitations expires for the year you dispose of the vehicle:

• Its purchase, improvement and basis-reduction records
• Each year's depreciation record
• Each year's log and business-share calculation, per-mile years included, since those miles reduce basis
• The sale or trade-in document showing when and how you disposed of the vehicle, its selling price and any expenses of sale

Under the trade-in rule above, a traded-in vehicle's file supports the new vehicle: keep it until the period of limitations expires for the year you dispose of the new vehicle, or of any later vehicle it is traded in for. Keep a lease agreement and payment records until the period of limitations runs out for the return covering the lease's last year.

Publication 583 applies every paper-records requirement to electronic storage, including imaging: the system must index, store, preserve, retrieve and reproduce records legibly and give the IRS a complete and accurate record. It lets originals be destroyed provided the system has been tested to establish that it reproduces them in compliance with IRS requirements and procedures are established to ensure continued compliance; the system must then be kept while the records are material to tax administration. It points to Revenue Procedure 97-22 for details; until your system meets it, keep the paper.

What changes in the records if you switch methods?

Publication 463 says that to use the standard mileage rate for a car you own, you must choose it in the first year the car is available for use in your business, and may choose either method later, subject to the bars below; for a leased car, a standard mileage rate you choose must be used for the entire lease period. Each change alters the file:

• Per-mile to actual costs. Publication 463 then figures straight-line depreciation from the basis as reduced for the per-mile years, so you need the purchase papers, each per-mile year's business-mile total, and operating-cost receipts from the switch onward.
• Actual costs to per-mile. Besides the five-car rule, Publication 463 bars the standard mileage rate for a car on which you claimed depreciation by any method other than straight line for its estimated useful life, used MACRS, claimed a section 179 deduction or the special depreciation allowance, or, for a leased car, claimed actual car expenses after 1997. Your first-year return, showing the method you chose, and your depreciation records show whether the per-mile method is still open.