Quick answer: You have two choices — the standard mileage rate or actual expenses — and for most Florida real estate agents, standard mileage wins. You drive a lot of miles in a normal car, and the per-mile rate usually beats what your actual costs would produce. Actual expenses pull ahead when the vehicle is expensive, the mileage is low, or it’s a truck or SUV rated over 6,000 pounds. But 2026 has a wrinkle nobody’s ready for: the IRS changed the mileage rate mid-year, so this is the first time in four years you need to know when you drove, not just how far.
If you drive 20,000 business miles a year — and plenty of agents I work with do — this decision is worth $5,000 to $15,000 of deduction. It’s also the deduction most likely to fall apart under examination, because almost nobody keeps the records the law actually requires.
I teach continuing education classes on this for agents, brokerage offices, and the Miami Realtor Association across South Florida, and the car question comes up in every single room. Let’s go through it properly.
First: the 2026 mid-year rate change
Normally the IRS sets one business mileage rate in December and it holds all year. That’s not what happened this year.
The rate started 2026 at 72.5 cents per mile. On July 1, the IRS raised it to 76 cents per mile for the rest of the year (Announcement 2026-11), citing the run-up in fuel prices. Mid-year changes are rare — the last one was 2022.
So for your 2026 return, you have two rates:
- January 1 – June 30: 72.5 cents per mile
- July 1 – December 31: 76 cents per mile
This matters more than the 3.5 cents suggests. If your mileage record is a single number you write down in December — and for a lot of agents, it is — you can’t prove which miles happened in which half of the year, and a careful preparer will apply the lower rate to everything. On 20,000 miles that’s roughly $350 given up for no reason other than recordkeeping.
Do this now: make sure your log separates first-half and second-half miles. A tracking app already has the dates and handles it. If you’ve been estimating, this is the year that catches up with you.
What actually counts as a business mile
Before the method question, the mile question — because this is where more deductions get lost than anywhere else.
Commuting is not deductible. Driving from your house to your brokerage office is a personal expense. Always has been. Doesn’t matter that you’re self-employed.
But here’s what changes the math for most agents: if your home is your principal place of business — you do your administrative work there, you don’t have a dedicated office at the brokerage, or you have one but you genuinely run the business from home — then the trip from your house to your first showing is a business mile. So is the drive home from the last one.
That’s the difference between deducting your whole day and deducting the middle of it.
Business miles for an agent typically include: showings, listing appointments, and inspections; driving between properties on a tour; closings, title companies, and the courthouse; client meetings, even at a coffee shop; CE classes and association meetings; runs to the sign shop, print shop, or staging warehouse; and previewing inventory — yes, that counts, you’re maintaining market knowledge.
Not business miles: the personal errand you tacked onto the end of a showing, the kids’ school run, and the drive to the office if the office is where you’re based.
Parking and tolls for business trips are deductible under either method — they’re not baked into the mileage rate. Same with the portion of your car loan interest attributable to business use, if you’re self-employed.
Method 1: Standard mileage
Multiply business miles by the rate. Add parking and tolls. Done.
Twenty thousand miles split evenly across 2026 comes to roughly $14,850. That’s the whole calculation.
What the rate already covers: gas, insurance, repairs, maintenance, tires, oil changes, registration, and depreciation. You don’t deduct those separately — that’s the trade. Simplicity for the flat rate.
One thing people miss: 35 cents of every mile is treated as depreciation in 2026, and it reduces your basis in the vehicle. Drive 20,000 business miles a year for five years and you’ve knocked $35,000 off your basis. When you sell or trade that car, the gain is bigger than you expected. It’s not a surprise if you know it’s coming — but it surprises people every year.
Method 2: Actual expenses
Add up everything the car costs — gas, insurance, repairs, maintenance, tires, car washes, registration, lease payments, depreciation — and deduct the business-use percentage.
Business-use percentage is total business miles divided by total miles driven. Note that you still need the mileage log. Actual expenses doesn’t get you out of tracking; it gets you more tracking, because now you’re keeping receipts too.
The catch is depreciation. If the vehicle is a regular car, truck, or van rated at 6,000 pounds gross vehicle weight or less, it’s a “passenger automobile” and Section 280F caps your annual depreciation regardless of what the car cost. For vehicles placed in service in 2026, the first-year cap is $20,300 with bonus depreciation and $12,300 without. Year two is $19,800, year three is $11,900, and every year after that is $7,160.
Buy a $75,000 sedan for the business and you’re writing it off for the better part of a decade. The “luxury auto” label is a joke at this point — these limits catch ordinary vehicles.
The 6,000-pound rule, and what people get wrong about it
You’ve heard some version of this at a sales meeting: buy an SUV over 6,000 pounds and write off the whole thing.
The rule is real. The details are wrong in almost every retelling.
A vehicle rated between 6,001 and 14,000 pounds GVWR escapes the passenger-auto caps above. But Section 179 is capped at $32,000 for 2026 on those vehicles — that’s the “Hummer loophole” fix Congress added in 2004, and it’s not the full purchase price.
What actually gets you to a full first-year write-off is 100% bonus depreciation, which the One Big Beautiful Bill Act restored permanently for property acquired and placed in service after January 19, 2025. Bonus has no SUV cap. So on a $90,000 heavy SUV used entirely for business: $32,000 under Section 179, then 100% bonus on the remaining $58,000. Full deduction, year one.
Three things before you go car shopping:
- GVWR is on the driver’s door jamb sticker. Not curb weight, not what the salesman says. Look at the label.
- Business use has to exceed 50%, and the deduction is limited to your business-use percentage. A $90,000 SUV at 60% business use produces a $54,000 deduction, not $90,000.
- If business use drops below 50% later, you recapture. Part of that deduction comes back as income in the year it drops. I’ve watched people take a huge write-off in year one and get an ugly surprise in year three.
And the thing nobody says out loud: a $90,000 deduction is not $90,000 back. At a 35% combined rate it’s about $31,500 of tax saved on a $90,000 cash outlay. Buying a vehicle you didn’t need to save taxes is still spending $58,500 you didn’t have to spend. Buy it because you need the vehicle. Take the deduction because you bought it.
The lock-in rule that traps people
This one costs real money and almost nobody knows it.
If you want the option to switch between methods later, you have to use standard mileage in the first year the vehicle is in service. Start with standard mileage and you can switch to actual expenses in a later year (using straight-line depreciation from there). Start with actual expenses — especially if you take Section 179 or bonus depreciation — and you are locked into actual expenses for that vehicle’s entire life.
So the agent who bought an SUV, took the big first-year write-off, and then wanted to switch to easy mileage tracking in year two? Can’t. Receipts forever.
Leased vehicles: if you use standard mileage on a leased car, you have to use it for the entire lease term. Pick once, at the start.
If you have a PA (S-corp), the answer is different
This is the part that trips up agents who’ve made the S-corp election.
If you’re a sole proprietor or single-member LLC, the car goes on your Schedule C and everything above applies directly. If you’ve elected S-corp treatment for your PA, it doesn’t work that way — the corporation is a separate taxpayer, and the car is almost certainly titled and insured in your personal name.
The clean answer is an accountable plan: the corporation adopts a written reimbursement policy, you submit your mileage log, and the corporation reimburses you at the standard rate. The reimbursement is deductible to the corporation and tax-free to you. Nothing shows up on your W-2.
Skip that step and you have two bad options. Reimbursements without an accountable plan become taxable wages. And deducting it yourself isn’t available — the OBBBA made permanent the disallowance of miscellaneous itemized deductions, which is where unreimbursed employee expenses used to live. The deduction just evaporates.
It’s a one-page document and a monthly expense report. I set these up all the time, and the agents who don’t have one are usually surprised to learn they’ve been giving up the deduction entirely. If you’re weighing the S-corp election at all, this belongs in the same conversation as your reasonable salary — both are execution details that determine whether the structure actually delivers.
What your mileage log has to contain
Section 274(d) requires contemporaneous records. Reconstructing from your calendar in April is better than nothing, but it’s not what the statute asks for, and examiners know the difference.
Every trip needs date, starting and ending point, business purpose, and miles — plus your odometer at the start and end of the year, so you can compute business-use percentage.
Use an app. MileIQ, Everlance, the mileage feature in QuickBooks — any of them run in the background and let you swipe business or personal. Thirty seconds a day, and it turns a shaky deduction into a solid one.
My rule of thumb
Standard mileage if you drive a normal car a lot of miles. That’s most agents.
Actual expenses if the vehicle is expensive relative to the miles, if it’s a heavy SUV or truck where the depreciation rules are genuinely better, or if your operating costs are unusually high.
When it’s close, I run both — ten minutes with a real mileage log, and it’s the only way to know. What I’d tell you not to do is guess. I see agents stay on a method for six years because it’s what their first preparer picked, and nobody ever checked whether it was still right.
The mistakes I see every tax season
- The December estimate. “About 18,000 miles, I think.” No dates, no destinations, no purpose. This is the single most common problem, and in 2026 it also costs you the second-half rate.
- The 100% business car. One vehicle in the household, claimed entirely for business. Nobody buys groceries? It invites the question, and the answer is rarely good.
- Deducting the car on the corporate return when the title, the loan, and the insurance are all personal — with no accountable plan anywhere.
- Assuming you can switch later. Take bonus depreciation in year one and mileage is off the table permanently for that vehicle.
- Forgetting parking and tolls. They’re deductible on top of the mileage rate, and agents pay a lot of both.
The bottom line
For most Florida agents, standard mileage is the right answer — and 2026 rewards it more than usual, at 72.5 cents through June and 76 cents after. The method matters less than the records. A well-documented mileage deduction survives examination. A great method with a guessed-at number doesn’t.
One related piece of housekeeping: the deduction only helps you if you’re also funding the tax bill as you go. Commission income has nothing withheld from it, so the mileage you deduct and the quarterly estimated payments you owe are two halves of the same calculation.
Track it as you go, split your 2026 log at July 1, and if you’re operating through a PA, get an accountable plan in place before year-end.
If you’d like to run both methods against your actual numbers — or you’re not sure your current setup is capturing the deduction at all — schedule a free consultation. It’s a short conversation and it usually finds money.
Don Fallenbaum, M.Acc, CPA/CFF/ABV, is the Principal of Fallenbaum CPA & Advisors, LLC in Plantation, Florida. Known as “The Real Estate CPA,” he has spent 25+ years serving Realtors, real estate brokerage offices, and real estate investors, and teaches continuing education classes on entity structuring and taxes for real estate professionals.
This article is for general educational purposes and isn’t tax or legal advice for your specific situation. Talk to a qualified professional before making decisions about your vehicle deductions.