# Business-Use Percentage

> Business miles divided by total miles. The pivot point for the actual expense method — and for the 50% MACRS-depreciation cliff.

Category: mileage-and-vehicle-expenses
Updated: 2026-05-26
Canonical: https://everylastmile.app/glossary/business-use-percentage

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**Business-use percentage** is the share of a vehicle's total annual miles that are business miles. It is computed as:

**Business miles ÷ Total miles (business + commuting + personal) = Business-use %**

**Why it matters.** Under the **actual expense method**, every cost you deduct — gas, insurance, repairs, depreciation, lease payments — must be multiplied by this percentage. You only get to deduct the _business_ share.

**The 50% MACRS cliff.** Under **IRC §280F(d)(4)(A)**, a passenger automobile is "listed property." If business use is **more than 50%**, you can use accelerated MACRS depreciation, §179 expensing, and (when available) bonus depreciation under IRC §168(k). If business use is **50% or less**, you are limited to straight-line depreciation under the Alternative Depreciation System (ADS) — _and_, if you previously claimed accelerated depreciation and then drop to ≤50% in a later year, IRC §280F(b)(2) requires you to "recapture" the excess depreciation as ordinary income. The 50% threshold is one of the genuine tax cliffs in the Code.

**The standard mileage rate sidesteps this.** Because the standard rate already bundles depreciation (35¢/mile of the 2026 business rate — 72.5¢ for miles driven Jan 1–Jun 30, rising to 76¢ July 1–Dec 31 — is the depreciation component, per Notice 2026-10 §4), and is applied on a per-mile basis, the business-use percentage matters less mechanically — you just multiply business miles by the rate. But you still need to _know_ total miles to fill out Schedule C Part IV honestly, and your basis still adjusts at 35¢ per business mile for eventual sale.

**Commuting is personal.** Commute from home to a regular work location is not a business mile under **Treas. Reg. §1.262-1(b)(5)** — even if you make a business call from the car. (Home-office exception under IRC §280A can flip this; see our IRS Commuting Rule guide.)

**Worked example.** Kai keeps her phone running ADT all year. The trip log shows:

- Business miles: **30,000** (delivery routes)
- Commuting miles: 0 (she works from home; the dash zone is the first business stop)
- Personal miles: 5,000

Total: 35,000. **Business-use % = 30,000 / 35,000 = 85.7%.**

Because Kai is well above 50%, she can use accelerated MACRS or §179 on the actual-expense side. If she instead picks the standard rate, she deducts 30,000 × $0.725 = $21,750 for miles driven in the first half of 2026 (miles from July 1 are figured at 76¢), and the 85.7% figure mostly serves as a reasonableness check on her log.