IRS mileage log requirements: A guide for businesses

For large and small businesses alike, business travel can be a significant expense category each year. You can claim the bulk of these travel expenses on your taxes with little more than a receipt and explanation of business purpose. But to deduct business mileage, you need a different form of documentation: a mileage log. 

‍

Below, we take a closer look at why you should be tracking your mileage and what the IRS requires from a mileage log. We also outline the process of creating a mileage log and offer advice on how to automate the process.

Why should businesses be tracking mileage?

If you use your vehicle for business purposes—for example, to visit a customer, purchase business supplies, move equipment, or attend a business meeting—you can deduct costs related to that business travel from your income taxes. This is also true if you reimburse employees for the business use of their personal vehicles. 

‍

But in order to claim these tax deductions, you must track your miles. This is true whether you claim the IRS standard mileage deduction or the actual expenses deduction. 

What is the IRS standard mileage rate?

The standard mileage rate is the specific dollar amount the IRS allows businesses to deduct from their taxable income for each business mile driven. The IRS sets the rate annually. For the 2024 tax year, the standard mileage rate is 67 cents per business mile.

‍

To make a claim using the standard mileage rate, you’ll need to know the total number of business miles driven—making a mileage log a necessity.  For example, if you and your employees drove a total of 15,000 business miles during the year, you would multiply 15,000 by $0.67 to calculate your mileage deduction: $10,050.

What is the actual expenses method?

When you use the actual expenses method to claim a deduction for business travel, you must first determine what percentage of the time you used a vehicle for business vs. personal use—again, requiring you to keep a mileage log. 

‍

To calculate this percentage, you’ll need to know the total number of miles you drove during the year, as well as the number of miles you drove for business. Then, you’ll divide the business mileage by the total mileage.

‍

For example, if you drove a total of 10,000 miles during the year, 2,000 of which were for business use, your business use percentage would be 20%—entitling you to deduct 20% of any vehicle costs incurred that year. 

IRS mileage log requirements

In order to deduct a business expense, the IRS requires you to keep adequate records to prove the accuracy and business necessity of the expense. To deduct mileage, the IRS specifically requires you to track the date, miles, address, and purpose of each business trip, as well as odometer readings for the beginning and end of the tax year.

‍

Here’s a more detailed breakdown of the information an acceptable mileage log must include:

‍

• Total annual mileage: How many miles you drove the vehicle over the course of the year for both business and personal use
• Annual business mileage: How many miles you drove the vehicle for business use
• Per-use business mileage: How many miles you drove the vehicle for each business trip
• Date of use: On which days you used the vehicle for business travel
• Business destination: Where you drove the vehicle
• Purpose: The business purpose that made travel necessary

‍

While not strictly required, supporting evidence of the business travel, such as communications or receipts, can be helpful if your business ever gets audited. 

‍

What is the penalty for no mileage log?

If you claim a business mileage tax deduction but don’t have an adequate mileage log proving your business travel, you could face a variety of penalties if the IRS decides to audit your business. 

‍

Best-case scenario, your business will be denied the deduction, and you may need to pay back the deduction you claimed, even if you legitimately used the vehicle for business travel. Worst-case scenario, you may face financial penalties such as fines. 

How long should you keep business mileage records?

The main purpose of a mileage log is to support your claims of business mileage in the event that the IRS ever audits your company. With this in mind, you should keep your mileage records for at least as long as your tax return may be subject to an audit.

‍

The IRS states that an audit can include tax returns filed within the last three years. But there are some instances where this window can widen to six years—typically if an auditor finds substantial accounting errors. 

‍

To be safe, tax experts often recommend that companies should keep records of their business expenses, including mileage, for seven years after filing a tax return.

How to create a business mileage log

Whether you choose to claim your deduction using the standard mileage rate or actual expenses method, you should note your vehicle’s mileage at the beginning and end of each year. Then, you should capture the following information for each business trip:

‍

1. Date of business travel: The date on which the travel took place
2. Starting and ending point: Your departure point and destination
3. Starting and ending mileage: An odometer reading before you begin to drive, and after you get to your destination, to calculate the miles driven
4. Business purpose: The reason for the travel
5. Other travel expenses: A note of other expenses related to the travel, such as parking and toll receipts

‍

How you record this information is ultimately up to you, but it is commonly done with:

Paper mileage logs

Paper mileage logs in the form of a notebook or diary are perhaps the oldest and most traditional means of tracking mileage. You can even purchase notebooks specifically designed to act as mileage logs, with dedicated fields to record all the relevant information. 

‍

Of course, these logs only work if you use them diligently for each business trip. When you’re running late to a meeting or otherwise in a rush, it’s easy to forget to log the required information—forcing you to try and remember or estimate mileage after the fact.

Mileage tracking apps

Thanks to smartphones and connected vehicles, mileage logs no longer need to be physical. There are many mileage tracking apps on the market that you can use to log your business miles. 

‍

When you start driving, all you need to do is specify whether a trip is for personal or business reasons, and the mileage tracker handles the rest—allowing you to enter key information like business purpose after the fact. Of course, you still need to remember to use the app each time you drive your vehicle, otherwise the trip won’t be logged.

Automate business mileage tracking with Ramp

Both paper mileage logs and mileage tracking apps require you (or your employees) to actively remember to log business miles. But we’re only human, and sometimes that means we might forget. While forgetting to log a trip isn’t the end of the world, it does mean your business could be leaving some money on the table when you write off expenses come tax time.

‍

By automating the process of logging business mileage, you can eliminate the risk of error. Ramp’s expense management platform makes it easy to automate your mileage tracking through convenient integrations. 

‍

It works like this: When your employees use personal vehicles for business travel, all they need to do is enter their starting point and destination. Then, Ramp automatically calculates the number of miles driven thanks to a direct integration with Google Maps.

‍

This precise mileage calculation reduces the risk of error or potential over-reimbursement that could result from manual tracking. Once the mileage is calculated, employees can record other necessary information like the date and business purpose for the trip to ensure compliance.

‍

Unlike many mileage tracking apps that only handle mileage, Ramp’s modern finance platform can process any other business expenses your employees might incur while on the road, from lodging and meals to parking fees, tolls, and more. Better yet, with Ramp’s mobile app, employees can scan receipts and submit expenses from the field so you never have to worry about lost or missing receipts.