Many healthcare professionals miss out on thousands in tax savings each year simply because vehicle deductions are misunderstood or overlooked. Your CPA might bring up mileage tracking at tax time, but rarely do they explain the bigger opportunities hidden in everyday driving.

This guide covers both sides:

• Mileage deductions — how to calculate them, what counts as business use, and how to keep records that stand up in an audit.

• Vehicle ownership and purchases — how Section 179, bonus depreciation, and employer-provided cars can allow practices to write off large portions (sometimes 100%) of a vehicle’s cost in the first year.

Take this example: a physician making 100 business trips per month, averaging 15 miles each, racks up 18,000 business miles annually. Using the 2025 IRS standard mileage rate of 70¢, that’s a $12,600 deduction. At a 24% tax bracket, it means about $3,000 back in after-tax savings.

And that’s just one doctor. Healthcare practices often have more eligible vehicle use than almost any other industry—from patient home visits to rotating between clinic sites to medical supply runs. With the right tracking and strategy, those miles translate into meaningful tax savings instead of wasted potential.

Why Healthcare Pros Get More Vehicle Deductions

Unlike many businesses that operate from a single office, healthcare work is inherently mobile. Physicians, dentists, and home health providers often log miles every week in ways that clearly qualify as business use:

• Driving between clinics, hospitals, or satellite offices

• Making patient home visits

• Picking up or delivering medical equipment and supplies

• Attending medical conferences or continuing education away from the main office

• Meeting with specialists or other providers outside the primary practice site

Every one of these trips can translate into deductible miles — but only if they’re documented correctly. That mobility is what makes healthcare practices uniquely positioned to benefit from vehicle deductions.

IRS Standard Mileage Rates:

For 2025, the IRS set the standard mileage rate for business use at 70¢ per mile (up from 67¢ in 2024), which is the rate healthcare professionals should use for practice-related driving such as patient visits, inter-office travel, supply runs, and professional meetings. The IRS also sets a 21¢ per mile rate for medical travel, but that applies only to patients deducting their own travel to receive care — not to practice operations.

Business vs. Personal Use: The Critical Distinction

The IRS draws a hard line here: commuting from home to your main workplace is always personal, not business, even if you wrap your car with medical ads.

What Counts as Business Use: Eligible trips include:

• Travel between different clinic locations

• Patient home visits

• Hospital rounds (if the hospital is not your primary workplace)

• Picking up or delivering medical supplies

• Professional meetings outside your main office

• Medical conferences and continuing education

What Doesn’t Count: Never deductible as business mileage:

• Home-to-office commuting

• Personal errands during work hours

• Lunch trips unrelated to business

• Travel that’s already reimbursed by an employer

Note that employees can no longer deduct unreimbursed mileage or vehicle expenses on their own returns. To avoid turning reimbursements into taxable wages, practices need to use an accountable plan.

Multiple Work Locations: If you work at more than one clinic or hospital, travel between those sites is deductible. But going from home to any of them is still considered commuting — unless you have a qualifying home office. In that case, driving directly from home to patient visits or secondary sites can be treated as business use from the start.

Mixed-Use Trips: How to Handle Them: If a single trip combines both business and personal stops, only the business portion is deductible.

• Example: You drive 12 miles to a patient home visit, then stop at the grocery store on the way home. You can deduct the 12 business miles to and from the patient’s home, but not the extra miles tied to personal errands.

• Pro tip: Mileage tracking apps make it easier to split trips accurately so you don’t lose deductions or raise red flags in an audit.

Avoid the “perfect log” trap: The IRS knows real travel varies. Mileage logs that show exactly 100 miles each week, or always round to the nearest 10, are a red flag. Record actual odometer-based or app-tracked miles to protect your deduction.

Employee reimbursements: If the practice reimburses staff under an accountable plan, the practice deducts the cost and the employee doesn’t pick up income—provided a mileage log/receipts are submitted. Non-accountable reimbursements are taxable wages.

Two Ways to Calculate Your Deduction

The IRS lets you choose between two methods — but your first-year choice matters.

• If you start with the Standard Mileage Method, you can switch to actual expenses later.

• If you start with the Actual Expense Method, you cannot switch to standard mileage for that vehicle in future years.

1. Standard Mileage Method

• Multiply your business miles by 70¢ per mile (2025 rate).

• This rate already includes gas, maintenance, insurance, depreciation, and wear and tear.

• Parking fees and tolls can still be deducted separately.

• Best for: Newer vehicles, moderate annual mileage, or anyone who wants simple recordkeeping.

2. Actual Expense Method

• Track all costs: fuel, repairs, insurance, registration, lease or loan payments, and depreciation.

• Deduct the percentage used for business.

• Best for: High-cost vehicles, older cars with heavy upkeep, or practices with high mileage.

Comparison Example: Standard vs. Actual: Dr. Patel drives 18,000 miles total in 2025, of which 14,000 are business. Her total vehicle expenses (gas, insurance, depreciation, etc.) come to $11,000.

• Standard Mileage Method
  14,000 miles × $0.70 = $9,800 deduction

• Actual Expense Method
  $11,000 × (14,000 ÷ 18,000) = $8,555 deduction

Result: In this case, the standard mileage method gives Dr. Patel a larger deduction.

But if her expenses were higher — say $16,000 instead of $11,000 — the Actual Expense Method would produce: $16,000 × (14,000 ÷ 18,000) = $12,444 deduction, which beats mileage.

Record-Keeping That Survives an Audit

The IRS requires contemporaneous records of business-related vehicle trips. Logs don’t have to be kept in real time, but they should be created soon after the trip — mileage “recreated” months later is likely to be challenged.

If tracking feels overwhelming, Town’s deduction guidance can help you understand what qualifies and keep records organized throughout the year.

Essential Mileage Log Elements: For every business trip, record:

• Date of travel

• Starting location and destination

• Business purpose (be specific: “patient home visit – Mrs. Johnson diabetes follow-up”)

• Miles driven

• Odometer readings at the beginning and end of each tax year

Acceptable Tracking Methods

• Paper logbooks: Still accepted, but easiest to lose or forget.

• Excel or Google Sheets: Perfectly valid if they include all required details and are updated regularly. Many practices prefer Excel for its simplicity and audit-proof formatting.

• Smartphone apps: The easiest way to keep precise records. They can:

  • Auto-detect trips with GPS

  • Let you classify trips as business vs. personal with a swipe

  • Generate IRS-compliant reports instantly

Popular app choices:

• MileIQ – simple, swipe-based trip categorization

• Everlance – integrates expense and receipt tracking with mileage logs

• Driversnote – offers odometer reports and team mileage tracking (useful for multi-staff practices)

Receipt Requirements for the Actual Expense Method
If you choose actual expenses instead of mileage, save receipts for:

• Fuel purchases

• Maintenance and repairs

• Insurance payments

• Registration and licensing fees

• Lease payments (or, if financed, the business-use share of loan interest)

• Parking and tolls (deductible under either method)

Common Mistakes That Trigger Audits

The IRS sees certain vehicle deduction errors so often that they’ve become red flags. Avoid these pitfalls to keep deductions safe:

Claiming 100% Business Use: Unless the vehicle is strictly business-only (like a wheelchair van or mobile clinic unit), claiming 100% business use is unrealistic. Even a quick personal errand counts as personal miles.

“Perfect” Mileage Logs: Logs that show exactly 100 miles each week, or only round numbers, look fabricated. Genuine business driving varies — your log should reflect that.

Backdated Records: Reconstructing months of mileage after the fact is a common audit problem. The IRS expects records to be created at or near the time of travel.

Ignoring the Commuting Rule: The most common error is claiming the daily drive from home to your primary clinic as a business expense, which is never eligible.

Real Healthcare Practice Examples

Solo Practice Physician

Dr. Sarah runs one main clinic but makes home visits three days per week and also sees patients at two hospitals.

• Eligible mileage:

  • Home visits to patients

  • Travel between her clinic and hospitals

  • Trips to medical supply companies

  • Medical conferences and continuing education

• Not eligible:

  • Daily commute from home to her main clinic

  • Personal errands or appointments during work hours

Annual deduction example: Dr. Sarah logs 8,000 business miles in 2025. At 70¢ per mile, that’s a $5,600 deduction, worth about $1,344 in tax savings at a 24% bracket.

Multi-Location Medical Group

A dental group operates three offices, with doctors rotating between sites.

• Eligible mileage:

  • Travel between the three practice locations

  • Lab delivery runs

  • Equipment pickups

  • Management meetings at non-primary locations

• Documentation strategy: Each doctor logs their primary location and tracks every inter-office trip to keep commuting separate from deductible business use.

Annual deduction example: If one dentist drives 5,000 inter-office miles, that’s a $3,500 deduction at 70¢ per mile. Multiply across multiple providers, and the deduction adds up quickly.

Home Health Agency

Nurses and therapists visit patients in their homes across a metro area.

• Eligible mileage: Almost all patient visits, supply runs, and inter-office travel.

• Special consideration: If the nurse’s home is their principal office, the first trip of the day to a patient’s home can count as business mileage, not commuting.

Annual deduction example: A nurse drives 15,000 patient-care miles. At 70¢ per mile, that’s a $10,500 deduction. If the agency owns the vehicle, it could instead claim 100% bonus depreciation for the full purchase price in 2025, then impute personal use (if any) through payroll.

Mileage and actual expenses cover the ongoing cost of using your vehicle. But if you’re looking at buying a new vehicle, the tax rules shift — and in some cases allow you to write off the entire purchase in year one.

Vehicle Purchases & Ownership

Section 179 and Bonus Depreciation: Write Off Vehicle Purchases Immediately

Healthcare practices purchasing qualifying vehicles in 2025 have unprecedented opportunities to expense the full cost immediately. Thanks to the One Big Beautiful Bill Act (OBBBA), both Section 179 and bonus depreciation are at their most generous levels ever.

Section 179 Limits for 2025

• Maximum deduction: $2,500,000

• Phase-out begins once total qualifying purchases exceed $4,000,000

• SUV limitation: $31,300 for vehicles between 6,000–14,000 pounds GVWR

• No dollar limit for cargo vans, trucks, and transport vehicles over 6,000 pounds GVWR that are not classified as SUVs

Definition: GVWR is the manufacturer’s Gross Vehicle Weight Rating (found on the door jamb label).

State Conformity Warning: Not all states follow the new federal rules. For example, California caps Section 179 at $25,000 and does not conform to federal bonus depreciation. In those states, the practice may only get a small state-level deduction in year one, even though the full cost is deductible on the federal return. 

100% Bonus Depreciation

• For property placed in service after January 19, 2025, OBBBA permanently restores 100% bonus depreciation.

• This allows practices to deduct the entire cost of new or used vehicles (so long as they are business-qualified) in the first year, without being constrained by Section 179 limits.

Definition: Placed in service generally means the date you take delivery.

Example: Full Write-Off in Year One: Your practice buys a $75,000 medical transport van in June 2025. The van has a GVWR over 6,000 lbs, and you use it 80% for business.

• Section 179 option: You can elect to expense the full $75,000 × 80% = $60,000 in 2025, subject to the $2.5M overall limit and SUV rules.

• Bonus depreciation option: Since bonus depreciation is back at 100%, you could also deduct the full $60,000 in 2025 automatically without using Section 179.

• Result: Either way, the full purchase price is deductible in year one. The choice comes down to planning flexibility — Section 179 lets you pick which assets to expense, while bonus applies across the board unless you opt out.

Example: High-Spend Practice: A multi-location healthcare group buys $3.5M in new medical transport vehicles in 2025.

• First $2.5M can be expensed under Section 179.

• The remaining $1M qualifies for 100% bonus depreciation.

• Total write-off: $3.5M in 2025.

This combination means even larger practices can expense vehicle fleets in the first year, well beyond the Section 179 cap.

Healthcare-specific use cases

• Mobile clinic vehicles

• Patient transport vans with wheelchair lifts

• Large SUVs used for home visit equipment

• Supply delivery vehicles

Section 179 and bonus depreciation generally require >50% business use.

OBBBA Update — Clean Vehicle Credits Ending: If you’re considering an electric or hybrid vehicle for practice use, note that the Clean Vehicle Credit, Previously Owned Clean Vehicle Credit, and Qualified Commercial Clean Vehicle Credit are all repealed for vehicles acquired after September 30, 2025. To qualify, the vehicle must be purchased and delivered before that date. Afterward, deductions like Section 179 and 100% bonus depreciation remain available, but the federal clean vehicle tax credits will no longer apply.

Planning Tip — Buy Before September 30, 2025, or Wait?

If you qualify for a clean vehicle credit and can take delivery by September 30, 2025:

• Act now. OBBBA repeals the Clean Vehicle Credit, Previously-Owned Clean Vehicle Credit, and Qualified Commercial Clean Vehicle Credit for vehicles acquired after September 30, 2025. “Acquired” means the date you take delivery.

• You can stack the credit with first-year expensing. The credit reduces the vehicle’s basis, and you can still expense the remainder using the new permanent 100% bonus depreciation or Section 179. This creates the largest combined benefit.

If you won’t qualify or can’t take delivery by September 30:

• No problem. You still get a full first-year write-off. OBBBA permanently restored 100% bonus depreciation for property placed in service after January 19, 2025. Even without credits, you can deduct 100% of the cost in year one.

Section 179 vs. 100% Bonus (both allow full expensing):

• Section 179: Elective, capped at $2.5M (phase-out at $4M), with an SUV cap of $31,300 for 6,000–14,000 lb vehicles, and can’t create a loss (excess carries forward).

• Bonus depreciation is automatic unless you opt out; it has no dollar or income limits, can create a loss, and is not subject to the SUV cap.

Other checkpoints:

• Business use must exceed 50%.

• Passenger autos under 6,000 lbs face “luxury auto” caps (passenger autos under 6,000 lbs GVWR, even when using actual expenses—these caps can limit first-year deductions unless you’re using the standard mileage method).

• SUVs/vans over 6,000 lbs avoid those caps, though Section 179 still has the $31,300 SUV limit.

Employer-Provided Vehicles: From Solo Practices to Large Groups

Whether you’re a solo dentist with an S corporation or a multi-physician group, the rules for employer-provided vehicles are the same: the practice can deduct the vehicle’s costs, but personal use must be treated as a taxable fringe benefit.

How It Works

• The practice owns or leases the vehicle.

• All business use is fully deductible (insurance, fuel, depreciation, maintenance).

• Any personal miles are valued using the Annual Lease Value method or the Cents-Per-Mile method.

• That value is reported as taxable wages on Form W-2 and subject to payroll taxes.

• Employees (including owner-employees) must keep mileage logs to separate business vs. personal driving.

Example: Dr. Lopez (S corp dentist) transfers his SUV to the practice. In 2025, he drives 15,000 miles total:

• 12,000 business (80%) → deductible to the practice.

• 3,000 personal (20%) → included in Dr. Lopez’s W-2 wages as a fringe benefit.

The practice still deducts 100% of the expenses (and can claim 100% bonus depreciation if the SUV is >6,000 lbs GVWR and >50% business use), while the personal-use portion is properly taxed.

If the cents-per-mile method is used, it applies only if the vehicle meets the IRS requirements (e.g., driven ≥10,000 miles a year and used primarily by employees). Otherwise, use the Annual Lease Value method.

Pros of Employer-Provided Vehicle Setup

• The practice can leverage Section 179 and 100% bonus depreciation for large upfront write-offs.

• Simplifies bookkeeping: all expenses run through the practice.

• Keeps deductions at the business level, even when multiple employees use the same vehicle.

• Personal use is cleanly handled through payroll, reducing audit risk.

Cons to Consider

• Requires accurate mileage logs for every driver.

• Personal use adds complexity to payroll processing.

• Fringe benefit value increases W-2 wages, which also increases payroll taxes.

• Increased FICA tax liability for the practice, as they must pay their share of payroll taxes on the imputed income from personal use.

• For lightly used vehicles, the standard mileage method may produce a simpler (and sometimes larger) deduction.

Red Flag Warning: The IRS closely scrutinizes claims of 100% business use. Unless the vehicle is clearly not available for personal use (for example, a wheelchair transport van or a mobile medical unit that stays at the clinic), claiming full business use can trigger an audit. Even small amounts of personal driving must be accounted for through payroll inclusion.

Vehicle Deduction Options: Side-by-Side

Group Practice with Employer-Provided Vehicle

A multi-specialty medical group buys a $90,000 SUV (GVWR >6,000 lbs) for doctors who rotate through multiple clinics and make frequent patient home visits. The SUV is owned by the practice and available for both business and occasional personal use.

• Deduction treatment: The practice can expense the full purchase price in 2025 using 100% bonus depreciation or Section 179 (subject to the SUV cap of $31,300 if Section 179 is chosen).

• Fringe benefit reporting: Personal use (say 10% of miles) is valued under IRS rules and reported on the doctor’s W-2 as taxable wages.

• Result: The practice deducts the full $90,000 in year one, while the doctor only picks up the personal-use portion as income.

Why it works: This setup maximizes upfront deductions while staying compliant. It’s especially effective for high-cost vehicles that support mobile medical services, provided mileage logs separate business from personal use.

Advanced Strategies for Healthcare Practices

Vehicle deductions can go beyond basic mileage logs. For practices with higher costs, multiple vehicles, or state-level complexities, these advanced approaches can make a meaningful difference:

Cost Segregation for Modified Medical Vehicles: Wheelchair-accessible vans, mobile clinic units, or other vehicles with permanent medical modifications may qualify for cost segregation studies. This breaks out the value of specialized equipment (like lifts or refrigeration units) for faster depreciation. Under OBBBA’s 100% bonus depreciation, these components can often be written off immediately.

Lease vs. Buy: Run the Numbers

• Leasing advantages: Lower upfront costs, predictable monthly payments, and often better if you swap vehicles every few years.

• Buying advantages: Section 179 and 100% bonus depreciation allow full expensing in year one (for vehicles with >50% business use), no mileage caps, and better economics for high-mileage drivers.

Multiple Vehicle Strategies: If your practice uses more than one vehicle, optimize per vehicle rather than applying a blanket rule. For example, use the standard mileage method for a newer, fuel-efficient sedan, but switch to actual expenses for an older SUV with high repair costs. Each vehicle can have its own deduction method.

State Tax Considerations: Not all states follow federal rules:

• Section 179: Some states cap deductions far below the federal $2.5M (e.g., California limits it to $25,000).

• Bonus depreciation: A number of states do not conform to federal bonus depreciation at all.

• Mileage reimbursements: State-allowed reimbursement rates for employees may differ from federal rates.

• Multi-state practices: Consider nexus and apportionment — vehicle miles across states can affect where deductions land.

Your Vehicle Deduction Action Plan

For This Tax Year (2025)

• Run the numbers for each vehicle: compare standard mileage (70¢/mile) vs. actual expenses to see which gives the bigger deduction.

• Start tracking now with a mileage app, Excel sheet, or logbook — don’t wait until year-end.

• Keep business and personal use clearly separated in your logs.

• Save all receipts for fuel, insurance, repairs, lease/loan payments, parking, and tolls (needed if using the actual expense method).

• If you’re considering an electric or hybrid vehicle purchase, remember: the Clean Vehicle Credits expire after September 30, 2025. To qualify, the car must be purchased and delivered by that date.

For Next Year’s Planning (2026 and Beyond)

• Review purchase timing: OBBBA expanded Section 179 to $2.5M with a $4M phase-out, and permanently restored 100% bonus depreciation. Consider whether it’s best to expense vehicles this year or wait.

• Evaluate whether the practice or the individual should own the vehicle. For S corps and C corps, entity ownership means personal miles must run through payroll, but it also allows the practice to leverage full expensing.

• Check your record-keeping system: mileage apps with IRS-compliant reporting may save you hours compared to paper logs.

• Multi-state practices should confirm whether their states conform to federal Section 179/bonus rules before making large purchases.

Before You File

• Recalculate both methods (mileage vs. actual) to ensure you’re using the most beneficial approach.

• Double-check your business-use percentage is reasonable and backed up by records.

• Ensure all supporting documentation is organized and accessible in case of audit.

• For large deductions, multi-vehicle strategies, or employer-provided cars, consider a professional review.

Town professionals work with healthcare practices year-round to time vehicle purchases, maximize Section 179 and bonus depreciation, and keep records audit-proof. With the right planning, vehicle deductions can save your practice thousands annually while staying fully compliant.

When Professional Help Makes Sense

Some vehicle tax strategies are straightforward, but others require specialized analysis. It’s worth involving a CPA or tax advisor when:

• You’re considering a cost segregation study for modified medical vehicles.

• You operate in multiple states with nonconforming rules on Section 179 or bonus depreciation.

• You’re weighing lease vs. buy for high-value vehicles.

• Your practice owns vehicles that are also used personally and need payroll inclusion calculations.

Town professionals work with healthcare practices every day on these exact issues. We can model federal vs. state impacts, keep your documentation audit-ready, and make sure you capture the full benefit of OBBBA’s expanded vehicle deductions.

Disclaimer: This content is for educational purposes only and does not constitute personalized tax advice. Tax laws are complex and subject to change. Individual circumstances can vary significantly, and strategies that work for one taxpayer may not be suitable for another.