Car Depreciation and Gig Driving: What Your Miles Really Cost

GigOdo Team · Published July 29, 2026 · Every figure sourced to the IRS, AAA, iSeeCars, or FHWA

How much value does gig driving take off your car?

Two clocks run on a working driver's car. The market clock is real money: iSeeCars measured average five-year depreciation of 41.8%, or $16,571, across more than 950,000 used cars. The tax clock is separate: the IRS writes 35 cents of basis off your car for every 2026 business mile you claim.

Drivers routinely confuse the two, and the confusion cuts both ways. Some skip the mileage deduction because they think claiming it damages the car. Others claim it for years and get blindsided by a tax bill when they finally sell. Neither clock is optional, and they run at different speeds.

The IRS number and the resale number are not the same number

Claiming the standard mileage rate does not make your car worth less. It reduces your adjusted basis, the figure used to compute gain or loss when you dispose of the vehicle. Buyers on the used market never see it. What they see is the odometer, the paint, and the service history.

The practical difference: your basis is fixed by a formula you control through your mileage log, while resale value is set by a market you do not control. A driver can have zero basis and a car worth $9,000, or a healthy basis and a car nobody wants. Both situations are common in gig work.

The depreciation rate buried in the 2026 mileage deduction

Section 4 of IRS Notice 2026-10 sets the portion of the business standard mileage rate treated as depreciation at 35 cents per mile for 2026. That is the basis reduction amount, and it has climbed steadily: 26 cents for 2022, 28 for 2023, 30 for 2024, 33 for 2025.

One detail matters for 2026 specifically. The IRS raised the business rate mid-year to 76 cents for July through December under Announcement 2026-11, but that announcement did not revise the depreciation component. The 35-cent figure from Notice 2026-10 stands for the whole year. Our breakdown of the 2026 IRS mileage rate for gig drivers covers both rate bands, and the mileage deduction calculator splits your miles across them.

What a year of gig miles does to your tax basis

The arithmetic is blunt. Every business mile you claim at the standard rate reduces basis by 35 cents, whether you drove 4,000 miles or 40,000. For a driver who bought a $24,000 used car for the work, here is how fast that basis disappears at typical gig mileage.

The IRS publishes its own version of this in Publication 463. In its example, a $30,500 car driven 92,700 business miles from 2020 through 2025 accumulates $26,224 of depreciation through the standard rate, leaving an adjusted basis of $4,276. That is six years of ordinary driving. A full-time delivery driver gets there in two or three.

What happens when your basis hits zero

Nothing bad, while you are still driving. IRS Publication 463 is explicit: you reduce basis by the depreciation in the standard mileage rate "but not below zero," and if basis reaches zero while you keep using the car for business, "no adjustment (reduction) to the standard mileage rate is necessary."

Read that twice, because it is the single most reassuring sentence in the whole topic. A paid-off car with zero remaining basis still earns you the full 76 cents a mile. The deduction does not shrink, expire, or get clawed back mid-life. The reckoning, if there is one, comes only at disposal.

What the car actually loses each year

Real depreciation behaves differently from the tax version, and the difference surprises most drivers. AAA's 2025 Your Driving Costs study prices five years and 75,000 miles of ownership across 45 top-selling models. At the standard 15,000 miles a year, the weighted-average vehicle lost $4,334 in value annually - about 28.9 cents per mile.

AAA adjusts depreciation for mileage: subtract $380 a year at 10,000 miles, add $442 a year at 20,000. Divide each by the miles and the per-mile cost drops from 39.5 cents to 23.9 cents. The heavier your foot, the cheaper each individual mile becomes in depreciation terms.

The extra miles are cheap. The car itself is not.

That last table hides the most useful finding in AAA's data. Going from 15,000 to 20,000 miles a year - 5,000 extra miles of gig work - adds only $442 of annual depreciation. That is 8.8 cents per marginal mile. Most of what a car loses is time and model year, not odometer readings.

For a driver deciding whether to take another shift, this is the number that matters. The marginal depreciation cost of the mile is under 9 cents against a 76-cent deduction and whatever the order pays. The mile is almost always worth driving. It is the decision to own a $30,000 car for the job that costs real money, and that cost lands whether the car moves or not.

The trap is averaging. Divide total ownership cost by miles and a car looks brutally expensive at 10,000 miles a year and reasonable at 20,000. AAA's weighted-average total cost per mile runs 99.95 cents at 10,000 miles and 66.10 cents at 20,000. Same car, same year, same payment.

Which vehicles lose the most value

Vehicle choice moves the number more than driving style does. iSeeCars analyzed over 950,000 five-year-old vehicles sold between March 2025 and February 2026 and published the spread in March 2026. The average car lost 41.8% of its value. The categories underneath that average are far apart.

Hybrids landing near the bottom of the loss table is worth noting, since they also post the lowest fuel cost per mile in AAA's data at 8.55 cents. Electrics carry the steepest value loss but the cheapest energy, a trade-off we work through in the guide to EV gig driving and the mileage rate. Neither number tells you what to buy on its own.

Selling or trading it in: where the bill arrives

This is the part drivers do not see coming. When you dispose of a car used in business, gain is sale price minus adjusted basis - and years of 35-cent write-downs make that basis small. Publication 463 states that the portion of any gain due to depreciation you claimed "will be treated as ordinary income."

Concretely: a driver who bought at $24,000, claimed 60,000 business miles over two years ($21,000 of basis reduction), and sells at $13,000 has a $10,000 gain even though the car obviously lost value in cash terms. That gain is taxable. It is not a reason to skip the deduction, which was worth far more - it is a reason to know the number before you list the car.

Trading in does not dodge it anymore. Publication 463 still describes a trade-in as a like-kind exchange, but the same page notes that like-kind exchanges completed after December 31, 2017 are "generally limited to exchanges of real property." The Tax Adviser is blunter: after the Tax Cuts and Jobs Act, disposing of personal property and exchanging it for like-kind personal property "is now a taxable event." Confirm your specific trade with a tax professional.

When the car is the real cost of the job

Gig driving compresses a car's life into a short window. FHWA Highway Statistics 2024 puts the average light-duty vehicle at 10,812 miles for the year. A driver running 30,000 business miles adds nearly three years of typical use in twelve months, aging the car on the odometer while the calendar-driven part of depreciation ticks along at its own pace.

That is the honest framing of the trade. The mileage deduction is generous, the marginal mile is cheap, and the fixed cost of owning a depreciating asset is the thing that quietly eats the earnings. If your car is cheap, paid off, and holds value, gig driving works. If you financed a new vehicle specifically for it, run the numbers before you run the miles.

Whichever way that goes, the deduction only exists if you documented the miles. The choice between methods changes what you can claim later, and our comparison of standard mileage versus actual expenses walks through the first-year election that locks it in. The mileage log that survives an audit covers what the record itself has to show.

Bottom line

Your car loses value on the market's schedule and loses basis on the IRS's schedule, and the two rarely match. Track both. Keep the depreciation total from your mileage log so you know your basis, and treat the eventual sale as a taxable event you planned for rather than one that found you.

GigOdo keeps the running total for you: every business mile logged automatically, deduction value computed at both 2026 rate bands, and the cumulative 35-cent basis reduction shown alongside it, so the number is ready when the car finally goes. See the free and Pro plan details, and the rest of the series in our mileage and records guides.

FAQ

Sources: IRS Notice 2026-10, section 4; Announcement 2026-11, IRB 2026-29; Rev. Proc. 2019-46, section 4.04; IRS Publication 463; IRS Tax Topic 510; AAA Your Driving Costs 2025; iSeeCars value retention study, March 2026; FHWA Highway Statistics 2024, Table VM-1; The Tax Adviser on like-kind exchanges of personal property. This article is general information, not tax advice.