Electric vehicle business mileage deduction and tax credits

Quick answer: Yes — mileage on an electric car used for business is deducted the same way as any other car: either the standard mileage rate or actual expenses. The documents provided don't cover the current federal clean vehicle purchase tax credit rules in detail, so I can't confirm what's available if you buy another EV.

Explanation:

For business use of a car — electric or gas-powered — you generally choose between two methods, as explained in IRS Publication 334: you can generally use one of the standard mileage rate or actual expenses methods, and the business standard mileage rate for 2025 is 70 cents a mile.¹ Publication 463 confirms the same 2025 rate for car expenses generally. For 2025, the standard mileage rate for the cost of operating your car for business use is 70 cents ($0.70) per mile.²

A few things to know if you go the standard mileage rate route:

• If you choose to use the standard mileage rate for a year, you can't deduct your actual expenses for that year except for business-related parking fees and tolls.³
• If you want to use the standard mileage rate for a car or truck you own, you must choose to use it in the first year the car is available for use in your business. In later years, you can choose to use either the standard mileage rate or actual expenses.⁴

If instead you use actual expenses (which includes depreciation), electric vehicles have their own depreciation caps. Publication 946 notes: The maximum depreciation deductions for passenger automobiles that are produced to run primarily on electricity are higher than those for other automobiles. The maximum deduction amounts for electric vehicles placed in service after August 5, 1997, and before January 1, 2007, are shown in the following table.⁵ For vehicles placed in service more recently, owners of electric vehicles placed in service after December 31, 2006, should use the table of maximum deduction amounts in the previous section titled Passenger Automobiles for electric vehicles classified as passenger automobiles or use the table of maximum deduction amounts for trucks and vans, later, for electric vehicles classified as trucks and vans.⁶

Also, if you claim a purchase-related vehicle credit, it affects your car's basis (which matters for depreciation): Publication 551 notes unless you elect not to claim the qualified electric vehicle credit, the alternative motor vehicle credit, the new clean vehicle credit, the previously owned clean vehicle credit, or the commercial clean vehicle credit for which you qualify, you may have to reduce the basis of each vehicle for which you claimed a credit, including any credit transferred to the dealer at the time you purchased the vehicle, by certain amounts reported. For more information on available credits, see Form 8834, Qualified Electric Vehicle Credit; Form 8910, Alternative Motor Vehicle Credit; Form 8936, Clean Vehicle Credits.⁷

What it depends on:

• Whether the EV is used for business, personal, or mixed purposes (only business-use miles/expenses are deductible)
• Which method you choose (mileage vs. actual expenses) and whether you chose consistently from year one
• Current eligibility rules for any purchase credit (Forms 8834/8910/8936) — these have changed significantly with recent legislation, and our documents don't detail 2025/2026 eligibility, phase-outs, or amounts

Given that clean-vehicle credit rules have shifted substantially under recent law changes, it's worth confirming current EV credit eligibility and amounts with a CPA before you buy, and to sort out the best deduction method for your specific business use.