Mileage Matters: How the 2025 IRS Rate Changes Impact Texas Small Businesses

For many Texas small business owners, mileage deductions are one of the simplest ways to reduce taxable income. Whether you’re meeting clients across Lubbock, making deliveries, or traveling to conferences, every mile adds up.

The IRS updates its standard mileage rate each year, and for 2025, the new rate has important implications for entrepreneurs, contractors, and employers in Texas. Let’s break down what changed — and how you can take full advantage.

1. The 2025 IRS Standard Mileage Rate

The IRS has set the 2025 business mileage rate at 67 cents per mile (up from 65.5 cents in 2024).

What this means:

• For every 1,000 business miles, you can deduct $670

• For 10,000 miles, that’s $6,700 off your taxable income

This increase reflects rising fuel and vehicle maintenance costs, giving business owners a little more relief.

2. Who Qualifies for the Deduction?

Mileage deductions apply to anyone using their personal vehicle for business purposes. In Texas, this includes:

• Real estate agents driving to property showings

• Contractors traveling between job sites

• Freelancers meeting clients at coffee shops or co-working spaces

• Delivery-based businesses and consultants

Important: Commuting miles from your home to your primary workplace do not qualify.

3. Standard vs. Actual Expense Method

Business owners can choose between:

• Standard Rate Method: Multiply total business miles by the IRS rate (most common and simple).

• Actual Expense Method: Track all auto expenses (gas, insurance, repairs, depreciation) and deduct the business-use percentage.

For many small businesses in Texas, the standard rate is easier and often just as beneficial.

4. Recordkeeping: The Key to Compliance

The IRS requires contemporaneous mileage logs to back up your deduction. Keep track of:

• Date of the trip

• Purpose (client meeting, delivery, etc.)

• Starting and ending odometer readings

• Total miles driven

Pro Tip: Mileage tracking apps like MileIQ, Everlance, or QuickBooks make this painless.

5. Texas-Specific Angle

With Texas being such a large state, many business owners drive more than their peers elsewhere. That makes this deduction even more valuable for local entrepreneurs.

Example: A Lubbock contractor who drives 15,000 miles annually could deduct over $10,000 using the 2025 rate.

6. Common Mileage Deduction Mistakes to Avoid

• Estimating instead of tracking → leads to denied deductions

• Mixing personal and business miles → only business miles count

• Forgetting tolls and parking fees → these are deductible on top of mileage

Conclusion

Mileage deductions are one of the simplest — yet most overlooked — ways to save money at tax time. With the IRS mileage rate increasing to 67 cents in 2025, Texas small business owners stand to benefit even more if they keep accurate records.

At ThinkProfit, we help ensure your books are clean, your records are audit-proof, and your tax deductions are maximized.

Talk to us today about making 2025 your most financially efficient year yet.