What vehicle expenses can a plumber or electrician deduct and should I use actual costs or standard mileage?
Most plumbers and electricians drive a dedicated work vehicle, usually a van or truck loaded with tools, parts, and equipment. That vehicle is one of your larger business expenses, and the IRS gives you two ways to deduct it. The standard mileage method and the actual cost method.
Standard mileage is the simpler option. You track your business miles and multiply by the IRS rate, which is 67 cents per mile for 2024. Drive 20,000 business miles and your deduction is $13,400. You can still deduct parking fees and tolls on top of that. The appeal here is that you only need a mileage log and don’t have to save every fuel receipt.
The actual cost method means tracking everything you spend on the vehicle throughout the year. Fuel, oil changes, tires, repairs, insurance, registration, loan interest, and depreciation all count. If the vehicle is used 100% for business, you deduct 100% of those costs. If you also drive it for personal errands, you calculate the business use percentage based on miles driven and deduct only that portion.
For most skilled trades professionals running a service vehicle, the actual cost method produces a larger deduction. Work trucks and vans burn more fuel, need more frequent maintenance, and cost more to insure than a typical passenger car. The standard mileage rate is built as an average across all vehicle types, so it tends to undervalue what it actually costs to operate a heavier service vehicle. A plumber’s van getting 15 miles per gallon with fuel at $3.50 is spending roughly 23 cents per mile on gas alone, before adding insurance, maintenance, tires, and depreciation on top.
There is an important rule to know before you choose. Once you elect the actual cost method for a specific vehicle, you generally cannot switch to standard mileage for that same vehicle in future years. You can go the other direction and start with standard mileage the first year then switch to actual cost later, but you lose the ability to use certain depreciation methods. The first year you place a vehicle in service matters, so talk to your tax preparer before filing.
If your truck or van is used exclusively for work, which is common when you also have a separate personal vehicle, tracking is straightforward. Every expense tied to that vehicle is fully deductible. Save your fuel receipts, keep repair invoices, and make sure your bookkeeping separates vehicle costs from other operating expenses cleanly.
If you mix business and personal driving on the same vehicle, you need a mileage log regardless of which method you pick. Even under the actual cost method, you have to document the business use percentage. Apps like MileIQ handle this well, or you can simply note your odometer reading at the start and end of the year and log personal trips.
One more thing worth knowing. The Section 179 deduction allows you to write off the full purchase price of a qualifying vehicle in the year you buy it, subject to limits. Trucks and vans over 6,000 pounds gross vehicle weight qualify for higher deduction limits. This can be a significant first-year write-off that your tax preparer should evaluate when you buy a new work vehicle.
Working with Phoenix bookkeepers who understand trades businesses means your vehicle expenses get categorized correctly throughout the year instead of being reconstructed at tax time from a pile of receipts. The method you choose follows you for the life of that vehicle, so getting it right from the start saves real money over time.
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