Leased vs. owned: the mileage deduction rule is different

The lease lock-in, specifically

Per IRS Publication 463's standard mileage rules, if you use the standard mileage rate for a leased vehicle, you must use it for the entire lease period — and that includes any renewal periods, not just the original lease term. There's no year-two opt-out to actual expenses the way an owned vehicle sometimes allows.

This differs from an owned vehicle: if you used standard mileage in the first year you owned it, you're generally allowed to switch to actual expenses in a later year (though switching back to standard mileage after using actual expenses has its own restrictions, tied to depreciation method — see standard mileage vs. actual expenses for the full first-year and switching rules).

Why this matters for a gig driver

Lease terms often run 24–36 months. Locking in standard mileage for that whole window means you're betting, up front, that the simpler per-mile rate will beat itemizing actual costs (depreciation, gas, insurance, repairs, lease payments) for the full term — not just this year. A car that starts needing expensive repairs in year two of the lease can't switch you to actual-expense deductions to capture those costs; you're stuck on the per-mile rate you already chose.

The math for which method wins more often favors standard mileage for lower-cost, fuel-efficient vehicles with modest maintenance needs — see the flip-point breakdown for the reasoning, adjusted for the 2026 split rate below.

The 2026 rate, if you're on standard mileage

Whether leased or owned, standard-mileage miles in 2026 are worth 72.5¢ per mile from January through June, and 76¢ per mile from July through December — set by IRS Notice 2026-10 (IR-2025-128) and Announcement 2026-11 (IRB 2026-29). See the full rate explainer.

What doesn't change between leased and owned

• What counts as a business mile — gig-work driving, not commuting or personal errands — is identical either way.
• Log requirements — date, miles, destination, business purpose — are the same regardless of how you acquired the vehicle. See what a compliant log needs.
• Lease payments themselves are only deductible if you use the actual-expense method (as a pro-rated "inclusion amount" adjustment for luxury vehicles) — under standard mileage, the per-mile rate already accounts for all vehicle costs, lease payments included, so you don't deduct them separately.