Taxpayers are allowed to deduct the “ordinary” and “necessary” expenses which are incurred throughout the year in conjunction with the operation of a trade or business. Individual taxpayers can deduct certain vehicle operating costs for self-employment activities, transportation to/from medical facilities related to obtaining medical care (services), moving purposes (if certain tests are satisfied), and in conjunction with donations of time and/or services to qualified charitable organizations.  No deduction is allowed for any portion of the cost of operating an automobile attributable to personal use.
 Self-employed and individual taxpayers have the option to 1) maintain and keep detailed records of actual automobile expenses or 2) utilize the standard per mile rates promulgated by the Internal Revenue Service.  The applicable standard mileage rate for charitable, medical, or moving expense miles is in lieu of all operating expenses (including gasoline and oil) of the automobile. The costs for depreciation or lease payments, insurance, and license and registration fees are not deductible, and are not included in the charitable or medical and moving standard mileage rates. These costs are included in the business mile rate. Taxpayers may separately deduct parking fees and tolls attributable to the use of the automobile for charitable, medical, or moving expense purposes.
 The IRS has recently published the standard mileage rates for 2011 that are applicable to 1) business miles driven, 2) miles driven for medical and moving expense deductions, and 3) miles driven in support and services that are provided to charitable organizations:
WASHINGTON — The Internal Revenue Service today issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 51 cents per mile for business miles driven
- 19 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Revenue Procedure 2010-51 contains additional details regarding the standard mileage rates.