The Business Owner’s Guide to Vehicle, Travel, and Entertainment Deductions

Introduction: Everyday Expenses That Could Be Lowering Your Tax Bill

If you’re a business owner, chances are you’re already spending money on vehicles, meals, and travel. But here’s the problem: most entrepreneurs either don’t deduct these expenses properly—or don’t deduct them at all.

And that means leaving money on the table.

This guide breaks down how to legally and strategically deduct vehicle, travel, and entertainment expenses under IRS guidelines. We’ll explain what qualifies, what doesn’t, how to document your spending, and how to avoid the red flags that lead to audits.

This article is part of our series on smart tax strategies.

Vehicle Deductions: What You Can Actually Write Off

Business vehicle expenses can result in substantial deductions—but only when handled properly. The IRS allows two methods for deducting the cost of using a car for business: the standard mileage method or the actual expense method.

1. Standard Mileage Method

• 70¢ per mile in 2025 (subject to annual IRS updates)

• You must track your business miles contemporaneously

• Simpler to calculate, but may yield smaller deductions

To use this method, you must:

• Start with standard mileage in the first year you use the car for business if you want the option to continue using it in future years

• Not operate five or more cars at the same time (no fleet use)

• Not have claimed accelerated depreciation (like Section 179) on the vehicle

2. Actual Expense Method

This method allows you to deduct the business-use percentage of:

• Gas and oil

• Maintenance and repairs

• Depreciation or lease payments

• Insurance

• Registration fees

Regardless of method, you must:

• Determine what percentage of your vehicle use was for business

• Keep a detailed mileage log—guesses don’t count

3. What Qualifies as Business Use?

• Driving to client meetings or job sites

• Visiting vendors, banks, or other business locations

• Traveling between two places of business

  
  

Important: Driving from home to your main office is commuting, and commuting is never deductible—unless you have a qualified home office, in which case your mileage to other business locations may count.

If your business owns the vehicle, depreciation and Section 179 expensing rules may apply.

Travel Deductions: When Business and Mileage Cross Borders

Business travel includes expenses incurred while away from your tax home—typically overnight—for work purposes.

Deductible Travel Expenses Include:

• Airfare or train tickets

• Hotels and lodging

• Rental cars, taxis, or rideshare

• Meals while traveling

• Tips, tolls, baggage fees

To qualify:

• The trip must be primarily for business

• The destination must be outside your metro area

• You must be traveling long enough to require rest or sleep

• Records and receipts must be maintained

Mixed Business and Personal Travel

Only the business portion of a mixed-use trip is deductible.

Example: You attend a 3-day conference in Chicago and stay an extra 2 days to visit family.

• Deductible: airfare (if primarily for business), hotel for 3 business nights, meals during business days, and conference registration

• Not deductible: sightseeing, hotel for personal days, meals during personal time

Spouse or family travel costs are not deductible unless they are employees and there’s a bona fide business reason for their presence.

Meals and Entertainment: What Still Qualifies in 2025

The 2017 Tax Cuts and Jobs Act significantly changed meal and entertainment deductions.

Meals

• 50% deductible if:

  • With a client, vendor, or employee

  • Directly related to business

  • You keep a record of who, when, where, and why

Examples of 50% deductible meals:

• Client lunches and dinners

• Employee meals while traveling

• Meals during business meetings

100% deductible meals:

• Company-wide holiday parties or team-building events

• Meals provided at a charitable event (with documentation)

• Meals included in employee taxable compensation

Entertainment

• No longer deductible, even if business-related

Not deductible:

• Sporting events, golf outings, shows, or club memberships

Exception: Meals purchased separately during an entertainment event may be 50% deductible if:

• They are itemized separately from the ticket

• Meet the usual business meal requirements

Common Mistakes and Red Flags

• Commuting is not deductible. Period.

• No documentation = no deduction. Keep mileage logs, receipts, and meeting notes.

• Mixing business and personal without documentation raises audit risk.

• Labeling entertainment as meals won’t fly—document clearly and follow IRS distinctions.

How to Track and Prove Your Deductions

You don’t need fancy software—but you do need consistency.

Mileage and Vehicle Use:

• Use apps like MileIQ or QuickBooks Self-Employed

• Record: date, destination, miles, and purpose of trip

Travel:

• Save flight, hotel, and conference confirmations

• Keep a business itinerary for each trip

Meals:

• Use a business credit card

• Write on the receipt who you met with and the business reason

Best Practice: Keep records for at least 3 years. Treat every deduction like it could be audited.

Tax Strategy Tips for 2025 and Beyond

• If you primarily use a vehicle for business, consider buying/leasing through your business

• Separate business and personal travel expenses on different credit cards

• Plan business trips around deductible activities—like conferences or meetings

• Evaluate your entertainment budget: is it still valuable if it’s not deductible?

Conclusion: Your Lifestyle Is Your Strategy

The IRS rewards good documentation and intentional alignment with your business.

Your car, your travel, your meals—they’re already part of your operations. With the right strategy and tracking, they become tools for reducing your taxable income.

The more intentional your spending and documentation, the more successful your tax strategy will be.