Vehicle and Mileage Records: What to Keep and Why

Why the vehicle is the record most often missing

Most small business owners drive for work: to a job site, a client, the supplier across town. The trips happen every day, and the record of them usually gets made in January from memory and a calendar. That is the weakest kind of record, and it is the one a CPA has to rely on if nothing better exists.

IRS Publication 463 says you generally must prepare a written record for it to be adequate, because written evidence is more reliable than memory, and that a record kept on a computer counts. It also says a record made at or near the time of the trip has more value than one prepared later. You do not have to write in it every day: a log kept up weekly that accounts for the week's use is treated as timely.

What a mileage log needs to show

Publication 463 lists the elements to record for car expenses. A simple log, on paper or in an app, covers all of them:

• The date of each business use of the vehicle.
• The business destination, such as the city, client or job site.
• The business purpose of the trip, in a few words.
• The miles for each business use. Odometer readings at the start and end of each trip, as in the publication's sample log, make the miles easy to support.
• Total miles for the year, business and personal together, so the business share can be figured.
• The vehicle itself: what it cost, any improvements, and the date you started using it for business.

Commuting, and what does not count

Publication 463 treats driving between your home and your main or regular place of work as personal commuting, no matter how far it is, even if you take business calls on the way. Putting your logo on the vehicle does not change that. Trips from one client or job site to another during the day are a different matter, and so is some travel from a home that is your principal place of business.

The rules have exceptions for temporary work locations and home offices, and they turn on facts. Log every trip with its purpose and let your CPA decide which miles count. The log's job is to make that decision easy, not to make it.

Parking fees and tolls for business trips belong in the record too. Publication 463 says they can be deducted in addition to the standard mileage rate, while parking at your own regular workplace is a commuting cost.

The 2026 rate changed in the middle of the year

The IRS set the 2026 business standard mileage rate at 72.5 cents a mile in Notice 2026-10. Then, in Announcement 2026-11, it raised the rate to 76 cents a mile for business miles driven on or after July 1, 2026, citing recent increases in the price of fuel. Miles driven before July 1 stay at 72.5 cents. The split applies to employee mileage allowances too: trips before July 1 stay at the earlier rate even when the reimbursement is paid later. That is one more reason every line of the log needs a date.

Using the standard rate is optional; the alternative is tracking actual costs. Publication 463 adds rules that make the first year important: to use the standard rate for a car you own, you generally must choose it in the first year the car is used in your business, a leased car using the standard rate must stay on it for the whole lease, and a business running five or more vehicles at the same time cannot use it. Which method fits your vehicles is a tax decision for your CPA, so keep the records both methods need until it is made.

Reimbursing employees for mileage

When employees drive their own cars for work, the business usually reimburses them. IRS Publication 15 says amounts paid under an accountable plan are not wages and are not subject to income tax withholding or Social Security, Medicare or federal unemployment tax. An arrangement is an accountable plan only if it meets three rules: the expense has a business connection, the employee accounts for it within a reasonable period, and any excess is returned within a reasonable period.

Publication 463 gives timings that are treated as reasonable, including accounting for expenses within 60 days and returning any excess within 120 days. It also says a mileage allowance at or below the federal rate is not included in the employee's W-2 wages when the plan's other rules are met. Amounts that are never substantiated are treated as paid under a nonaccountable plan, which makes them wages. A written one-page policy and a standard mileage form keep this simple. Churches can follow the same approach in reimbursing church expenses.

How the books carry it, and the January handoff

If a vehicle is owned by the business, its purchase is generally recorded as an asset rather than an expense, and fuel, repairs, insurance and registration are recorded as vehicle expenses as they are paid. If the vehicle is personal, the business usually records only mileage reimbursements, backed by the log. Either way, personal use is documented rather than guessed; separating business and personal spending explains how owner money is recorded.

At year end, the CPA needs the log with its annual total, odometer readings at the start and end of the year, the vehicle purchase or lease papers, and receipts for vehicle costs. Publication 463 says supporting records are generally kept for 3 years from the date the return is filed, and records of business use for each year of a vehicle's recovery period if it is depreciated. The year-end handoff to your CPA lists the rest of the package.

Building a receipt and mileage routine that actually gets used is part of the process work in small business bookkeeping, and how we work sets out where bookkeeping ends and your CPA's work begins. If you are weighing who should keep these records at all, see in-house vs. outsourced bookkeeping.