‍Depending on how much time you spend on the road, claiming mileage as a business expense on your tax return could substantially lower your tax bill for your therapy practice.

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In order to claim the expense, you’ll need to carefully track the miles you travel over the course of the year, and store and organize receipts and other documents related to your expenses. 

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Here’s what you need to know to get started—so you can track your mileage easily, keep accurate records, and take advantage of the mileage deduction for therapists.

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Note: This article has been updated to reflect 2024 rates.

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Can you deduct the cost of commuting to your therapy practice?

This is the most common question about mileage deductions the tax professionals at Heard hear from therapists. The answer is…

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No.

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The cost of traveling to and from your regular place of business—whether you want to claim the mileage deduction, or any other travel deduction for therapists—is not a deductible business expense.

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That applies whether your office is just down the road, or located in a different state. 

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However, if you travel a significant distance away from your office for business purposes, related travel expenses—including mileage—may be claimed on your tax return.

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That’s because you’re traveling outside your “tax home.” What does that mean? In the words of the IRS, “Your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home.”

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For instance, if your therapy practice is located in Salinas, CA, and you drive an hour to San José to facilitate a workshop there, the mileage is tax deductible. As are any other travel-related business expenses. Check out our guide to business travel deductions for therapists.

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On the other hand, if your practice is located in South Salinas, and you drive to North Salinas to lead a group therapy session, you cannot deduct the mileage expense, since you never left your tax home.

How do you calculate the mileage expense for your therapy practice?

You have two methods to choose from when it comes to calculating the mileage deduction for your therapy practice: the standard mileage rate and the actual expenses method.

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The standard mileage rate is the simplest. For every mile you traveled for business during the course of the year, you’re able to deduct a specific amount from your taxes.

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The actual expenses method requires you to add up all the vehicle-related expenses you paid over the course of the year, calculate the percentage of the total miles you traveled that had a legitimate business purpose, and then claim that percentage of expenses as a tax deduction.

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If you use the actual expenses method to claim mileage one year, you’re required to use it every year after—there’s no switching back to the standard mileage rate. 

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Also, if you lease your vehicle, the amount you can claim with the actual expenses method may be significantly limited. In that case, consult with an accountant before making any major decisions.

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Here’s a breakdown of how to use each method.

How to claim the mileage deduction using the standard mileage rate

The standard mileage rate changes year to year. The IRS provides a list of mileage rates past and present you can use to calculate your deduction.

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Note: In 2023, the rate was $0.655 per mile. For 2024, the rate has increased to $0.67 per mile.

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Here’s how to calculate your deduction.

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1. Add up all every mile traveled for work during the tax year you’re filing for. 

Example: In 2021, you traveled 1,200 miles for business.

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2. Find the relevant mileage rate for the year you’re filing.

Example: The mileage rate in 2021 was $0.56.

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3. Multiply the total miles traveled by the mileage rate for the year.

Example: 1,200 multiplied by $0.56 is $672.

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4. Deduct the total on your tax return.

How to claim the mileage deduction using the actual expenses method

The actual expenses method is more complicated than the standard mileage deduction, but depending on how much you pay to use and maintain your vehicle, it could result in a large tax deduction.

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Here’s how to calculate it:

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1. Add up all your vehicle expenses for the year, including the cost of

• Fuel
• Insurance 
• Vehicle loan interest
• Vehicle depreciation
• Parking fees
• Garage rental
• Tolls
• Lease payments
• Oil changes
• Maintenance
• Repairs
• Tires
• License and registration fees

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Example: Adding up all these expenses, the total cost of using your vehicle last year was $5,000. 

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2. Calculate the percentage of vehicle use for the year that was devoted to business. 

Example: You drove 14,000 miles last year, and 700 of those miles were business travel, so you can deduct 5% of your total vehicle expenses.

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3. Multiple the percentage of miles traveled for business by your total vehicle expense.

Example: 5% of $5,000 is $250, so you can deduct $250 in mileage expenses on your tax return.

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The business mileage expense and recordkeeping

As with any business expense you intend to claim on your tax return, it’s essential you keep consistent, accurate records.

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In the event of an audit, if you can’t prove you actually incurred the expenses you claimed on past tax returns, the IRS could penalize you. Major transgressions could even lead to charges of fraud.

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The statute of limitations on tax returns is six years—so hold on to any records you need to keep for up to six years after you claim them.

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If you’re using the standard mileage rate, keep detailed logs of all your business travel over the course of the year. For long trips during which you claim business mileage—for instance, driving to another state for a conference—keep copies of supporting documents: Your travel itinerary, and receipts for travel-related business expenses.

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To claim the actual expenses deduction, you’ll need to do even more recordkeeping. Plan to hold on to receipts for every vehicle expense you incur and plan to claim, whether it’s a gallon of wiper fluid or a new transmission. In the event of an audit, you’ll need them to support your case with the IRS.

Where do you report the mileage deduction on your tax return?

The way you claim the mileage deduction on your tax return depends on your business structure. Here’s how to do it based on the three business structures most commonly used by therapists.

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The business mileage deduction is just one of many deductible expenses you may be able to claim on your tax return. For more, check out our complete guide to tax deductions for therapists.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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Bryce Warnes is a West Coast writer specializing in small business finances.

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