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For many drivers, toll expenses can add up to a significant amount over the course of a year. Understanding whether these costs are tax-deductible can potentially save you money come tax season.
Related: Is Parking Tax Deductible? | Parking Tax Deduction Explained
However, the rules surrounding toll deductions can be complex and have changed in recent years. This article will guide you through the current regulations and help you determine if your toll expenses qualify for a tax deduction.
General Rules for Toll Deductions on Taxes
The deductibility of tolls primarily depends on the purpose of your travel and your employment status. Generally, tolls are tax-deductible when incurred for business purposes by self-employed individuals or business owners.
Deductible tolls can include those paid for highways, bridges, tunnels, and even electronic toll collection systems like EZ Pass. However, it’s important to note that since the Tax Cuts and Jobs Act of 2017, employees can no longer deduct unreimbursed work-related expenses, including tolls.
Related: Common Tax Deductions To Plan for in 2025
Business-Related Toll Tax Deductions
For self-employed individuals and business owners, tolls paid during business-related travel are generally tax-deductible. This includes tolls incurred while traveling to meet clients, attending business meetings, or making deliveries.
It’s crucial to distinguish between business travel and commuting. Tolls paid during your regular commute to your primary workplace are not deductible, as the IRS considers this personal travel.
Charitable Work and Toll Deductions
Tolls paid while volunteering for a qualified charitable organization may be tax-deductible. This applies to unreimbursed expenses directly related to providing services to the charity.
When deducting tolls for charitable work, you have two options: you can either use the standard mileage rate for charity (14 cents per mile as of 2024) plus tolls, or deduct your actual expenses, including tolls. Whichever method you choose, maintaining detailed records is essential for substantiating your deduction.
Related: Top 15 Easy Tax Deductions For The Self-Employed
How Do You Claim Toll Tax Deductions?
There are two primary methods for claiming toll deductions: the standard mileage rate method and the actual expenses method. With the standard mileage rate (67 cents per mile for business use in 2024), you can deduct tolls and parking fees separately in addition to the mileage rate.
The actual expenses method allows you to deduct the real costs of operating your vehicle for business, including tolls, gas, repairs, and depreciation. You’ll need to calculate the percentage of your vehicle use that’s for business and apply that percentage to your total expenses.
What Records Should You Keep for Toll Deductions?
Maintaining accurate records is crucial for claiming toll deductions. Keep all receipts for toll payments, whether they’re paper receipts or electronic records from a toll transponder account.
For each toll expense, record the date, amount, location, and purpose of the trip. A mileage log that includes these details can be invaluable if you’re ever audited by the IRS.
Related: Rideshare Tax Guide: What You Need To Know For 2024
Common Misconceptions About Toll Deductions
Many people mistakenly believe that all toll expenses are tax-deductible. However, tolls paid for personal travel or daily commuting to your regular workplace are not deductible.
Another common misconception is that employees can deduct unreimbursed toll expenses. Since the Tax Cuts and Jobs Act of 2017, this is no longer the case for most employees.
How TripLog Helps with Toll Deductions
TripLog offers features specifically designed to help track toll expenses along with your mileage. The app allows you to easily log toll payments as part of your trip details, ensuring you don’t miss any deductible expenses.
With TripLog, you can generate comprehensive reports that include both mileage and toll expenses, making it easier to prepare your tax returns or submit expense reports. The app’s GPS-based tracking also helps differentiate between business and personal trips, crucial for accurate toll deductions.
Related: IRS Mileage Log Requirements
Tax Deductions on Tolls: Conclusion
Understanding toll deductions can help you maximize your tax savings if you’re self-employed or use your vehicle for charitable work. While the rules can be complex, keeping accurate records is key to claiming these deductions successfully.
A great way to maximize your tax deduction is by moving away from manual mileage and expense logs to TripLog! Download TripLog for free on iOS or Android today.
