Question on the gas mileage deduction

Does the gas mileage deduction more than make up for the cost of gas?

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Short answer is no. People often confuse a business expense deduction with a tax credit. The gas deduction reduces your taxable income so the actual amount of the “savings” depends on your tax bracket. So if you are in the 15% bracket for instance, for every dollar you claim as a gas mileage deduction you are reducing your taxes by just 15 cents. This is a bit of an over simplication but the concept is valid.

@kenasch wrote:

Short answer is no. People often confuse a business expense deduction with a tax credit. The gas deduction reduces your taxable income so the actual amount of the “savings” depends on your tax bracket. So if you are in the 15% bracket for instance, for every dollar you claim as a gas mileage deduction you are reducing your taxes by just 15 cents. This is a bit of an over simplication but the concept is valid.

The deduction is 58 cents. So if I drive 100 miles, that takes $58 off of my taxable income. When you figures I'm also paying for Social Security and Medicare tax, that would reduce those taxes too.

Fine, as long as you realize it’s not a dollar for dollar reduction in taxes owed. You are reducing your taxable income so the actual reduction in tax owed depends on your tax bracket.

It probably does or comes close. You drive 100 miles, deduct $58 from your income, save around $9 in employment taxes. If you pay income taxes too, you save more. Nine dollars might buy enough gas to drive 100 miles, but it doesn't cover the wear and tear on your vehicle, which will be even more costly than the gas in the long run.

I always try to get a couple gas shops if I'm making a long trip. That covers the gas expense then and the tax savings covers my wear and tear.

It also depends on the cost of your gas. I live in a city with one of the higher gas prices in the nation by over a dollar sometimes when I hear the national average price on tv. But in my case I drive a car with good gas mileage. Aside from the tax savings there is the cost to run your car. My old car got 15mpg so a gallon did not go far. My current car gets triple that so the tax savings would definitely cover my cost for gas. And since I do not put on an excessive number of miles on my car my fixed costs per mile are higher so every 54.5 cents I get for driving for "work" makes a dent in the high fixed cost I have to drive my car. Those are for things like insurance, oil changes, new wiper blades etc that I have to pay whether I drive 2 miles per year or 20,000.

It usually does, and it is designed that way. But, yes, it reduces taxable income. Just keep good records. And it is always from ho9me and back
unless you do other stuff in between.

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Question on the gas mileage deduction

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