Mat Sorensen

Mileage Deduction vs Actual Expenses: Which Saves More #taxes #deductions #taxhacks

The video explains how self‑employed professionals can deduct vehicle costs, emphasizing that only the business‑use portion qualifies and that taxpayers have two distinct methods to claim those expenses. The standard mileage deduction offers a flat rate—currently 72.5 cents per mile—making it easy to calculate; alternatively, the actual‑expense method requires tracking fuel, repairs, insurance, and depreciation, then applying the business‑use percentage to the total. For example, driving 10,000 business miles yields a $7,250 deduction under the mileage rate, while an 80% business‑use vehicle lets a taxpayer deduct 80% of all recorded costs, including any bonus depreciation taken on a new purchase. Choosing the optimal method can materially affect after‑tax cash flow, and the decision hinges on record‑keeping discipline, vehicle cost structure, and the likelihood of maximizing depreciation benefits.