Your car was totaled mid-year — what happens to your deduction?

Miles driven before the loss stay deductible

Nothing in Publication 463 ties a business trip's deductibility to the vehicle's fate later in the year. Each trip in your log — date, miles, destination, purpose — stands on its own, the same way it would if you'd simply sold the car instead of losing it. See what a compliant log needs. And the 2026 split rate — 72.5¢ per mile January 1–June 30, 76¢ from July 1 — applies to those miles by the date you drove them, exactly as it would in a normal year.

The casualty loss is on the basis that's left, not the whole car

Publication 463's own worked example shows how standard mileage quietly reduces a car's basis every year you use it: for automobiles used for business, "the portion of the business standard mileage rate treated as depreciation is 26 cents per mile for 2022, 28 cents per mile for 2023, 30 cents per mile for 2024, 33 cents per mile for 2025, and 35 cents per mile for 2026," per Notice 2026-10. That per-mile amount is subtracted from the car's original cost each year, building down to an adjusted basis — see how that basis math works for the full mechanics and the IRS's own worked example.

Publication 547 gives the formula for business or income-producing property that's stolen or completely destroyed: the decrease in fair market value isn't considered at all — your loss is your adjusted basis, minus any salvage value, minus any insurance or other reimbursement you receive or expect to receive. Because the standard-mileage depreciation already lowered that adjusted basis year by year, you aren't claiming the depreciation twice — the casualty loss picks up only what's left after it.

Business use vs. personal use — the part most drivers miss

Since the 2017 tax law, Publication 547 limits casualty and theft losses on personal-use property to losses "attributable to a federally declared disaster." A lot of drivers read that and assume a routine accident or theft — no disaster declaration involved — means no deduction at all. That limitation is specifically for property "not connected with a trade or business or a transaction entered into for profit." The business-use share of a gig vehicle isn't personal-use property, so it isn't subject to that limitation.

What this means in practice: if your car was used partly for gig work and partly personally, Publication 547 requires you to figure the casualty loss separately for each portion — "allocate the total cost or basis, the FMV before and after the casualty or theft loss, and the insurance or other reimbursement between the business and personal use of the property." The business-use portion follows the ordinary business-property formula above regardless of any disaster declaration; only the personal-use portion is subject to the federally-declared-disaster limit.

If insurance pays you more than the basis

Publication 463 notes that a casualty or theft can produce a taxable gain, not just a loss: "a gain results when you receive insurance or other reimbursement that is more than your adjusted basis in your car." It also offers a way to avoid recognizing that gain immediately: "If you then spend all of the proceeds to acquire replacement property (a new car or repairs to the old car) within a specified period of time, you don't recognize any gain" — with your basis in the replacement car reduced by the gain you didn't recognize. See Publication 547 for the specifics of that replacement-period rule.

Once you replace the car

The replacement vehicle starts its own clean slate — its own first-year standard-mileage-or-actual-expenses election and its own log, independent of what happened with the old car. That's the same mechanic covered in changed vehicles mid-year, which walks through the odometer split and the 2026 rate applied to each vehicle separately.