Standard mileage or actual expenses? I ran my own van both ways.

By Sabett, founder of MileGravy ·September 6, 2026 ·6 min read

Every year somebody tells me I'm leaving money on the table by taking the standard mileage rate on a cargo van. Big vehicle, bad gas mileage, expensive to insure — surely actual expenses wins?

I've run the numbers on my 2017 Transit 250 both ways. Standard mileage wins, and it isn't close. But it wins because of how I drive, and if you drive differently the answer flips.

The two methods

Standard mileage is one multiplication. Business miles times the IRS rate. For 2026 that's 72.5¢ for miles driven through June 30 and 76¢ from July 1 (Announcement 2026-11 modified the rate set in Notice 2026-10). The rate is meant to cover gas, oil, repairs, insurance, registration and depreciation — the whole cost of running the vehicle.

Actual expenses means you total what the vehicle really cost you — gas, insurance, repairs, tires, registration, depreciation — and deduct the business-use percentage of it.

Both need the same thing underneath: a mileage log. Actual expenses needs your business miles too, because business-use percentage is business miles divided by total miles. There is no version of this where you get to skip tracking.

The rule that decides it before you do

This is the part that costs people the most, and it happens in year one.

Tax Topic 510 puts it plainly: "To use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use the standard mileage rate or actual expenses."

Read that twice. Taking standard mileage in year one keeps both doors open. Taking actual expenses in year one closes the standard-mileage door permanently for that vehicle.

Leases are stricter: "For a car you lease, you must use the standard mileage rate method for the entire lease period (including renewals) if you choose the standard mileage rate." Pick one and you're married to it for the lease.

If you're putting a vehicle into service and you genuinely don't know which method wins, standard mileage in year one is the choice that keeps your options. That's not tax strategy — that's just not locking a door you might want later.

My van at 30,000 miles

Here's the comparison on a cargo van at 30,000 business miles, split evenly across the July 1 rate change. The actual-expense side uses round, illustrative figures for a used van — your gas, insurance and repairs will be your own — but the shape is right for the kind of vehicle delivery drivers actually run.

Nearly six thousand dollars, and I didn't have to keep a single receipt to get it.

Why standard wins here

The IRS rate is built around an average vehicle at average cost. When you drive a lot of miles in a vehicle that's already paid for, you blow past that average on the mileage side while your real costs stay flat. Thirty thousand miles times 76 cents is a big number. Insurance and plates cost the same whether you drive 3,000 miles or 30,000.

Depreciation is the other half. A used van bought for $18,000 has a limited amount of depreciation in it, and once you've burned through it, the actual-expense column loses its biggest line item and never gets it back. The standard rate doesn't care — it pays the same 76 cents in year six as year one.

When actual expenses wins

Flip both variables and the answer flips with them:

• Expensive vehicle, low miles. A $55,000 truck driven 8,000 business miles gets you $6,080 of standard mileage. Depreciation alone on that vehicle can beat it outright.
• A genuinely bad year of repairs. A transmission and a set of tires in the same year can move the needle, though it usually takes more than one bad year to beat a high-mileage standard deduction.
• Heavy vehicle, terrible economy, moderate miles. If you're getting 11 mpg and driving 12,000 business miles, the gas line gets large relative to the mileage deduction.

The rough test: if your business miles are high and your vehicle is cheap, take standard. If your vehicle is expensive and your miles are low, run both. The crossover is real, and it lives somewhere around "new vehicle, under 15,000 business miles."

Switching later isn't free either

Say you took standard mileage for four years and now actual expenses looks better. You're allowed to switch — that's the whole benefit of having chosen standard in year one — but the switch isn't a clean slate.

The standard rate has a depreciation component baked into it, and every year you took the rate, you used up some of your vehicle's basis whether you thought about it or not. When you move to actual expenses, your remaining depreciable basis is reduced by the depreciation you're treated as having already taken. On a vehicle you've run 30,000 miles a year through for four years, there may be very little basis left to depreciate.

There's also a restriction on the depreciation method available after you've used the standard rate. This is genuinely the point where a preparer earns their fee — it's a calculation, not a judgment call, and getting it wrong compounds every year afterward.

The practical takeaway: the switch is most worth doing right after you buy a vehicle, and least worth doing on a van you've already driven into the ground on the standard rate.

Two vehicles, two answers

If you run more than one vehicle in the business, the choice is per vehicle, not per person. I can take standard mileage on the van and — if the numbers said so — actual expenses on a second car, as long as each one's first-year election allowed it.

What you can't do is blur them. Each vehicle needs its own mileage figures, and if you're on actual expenses for one, its own expense records. Two vehicles is roughly two sets of bookkeeping, which is another quiet argument for standard mileage when the numbers are close.

The cost nobody prices in

Actual expenses means keeping every receipt for every gallon of gas, every oil change, every tire, all year, and being able to produce them years later. It means tracking total miles as well as business miles so you can compute the percentage. It means a depreciation schedule you have to carry forward correctly.

Standard mileage means keeping a mileage log — which you need anyway — plus your tolls and parking, which are deductible on top of the rate either way.

I've done both. The bookkeeping difference is hours per month, and my hours are worth deliveries. If the two methods came out within a few hundred dollars of each other, I'd take standard mileage on the paperwork alone.

If you want to see what standard mileage produces for your own driving, the mileage deduction calculator runs it at the current rate in a few seconds.

What to do

If the vehicle is new to your business this year: take standard mileage unless you have run the numbers and actual clearly wins. That preserves your right to switch later.

If the vehicle has been in service and you took standard mileage before: run both every year or two, especially after a big repair year. You're allowed to switch.

If you took actual expenses in year one: that door is closed for this vehicle. Keep your receipts, keep them well, and remember that the next vehicle is a fresh decision.

I drive for a living and I read the IRS pages carefully, but I'm not an accountant and this isn't tax advice. Your return is yours — check anything that matters with a preparer who knows your situation.