Chicago Tax Deduction Mileage: Business Trips vs. Commutes

What to take away

Where business mileage starts and the commute stops

The commute is personal driving and never deductible. That much is settled.

What moves is the line. A Chicago consultant's main place of business is usually a home office, a coworking desk in the Loop, or a studio in Logan Square. The first drive of the day to that base is commuting.

Business mileage starts when you leave that base for a client. Lakeview home office to a West Loop client is deductible. The same trip from your apartment, with the home office as your main base, is commuting.

The IRS sets out the commuting rule and the temporary work location rule in Publication 463. A client site you expect to last a year or less can count as a business destination.

Two Chicago patterns cause most of the errors. A consultant who rents a downtown desk and also works from home has to pick one main place of business. A consultant driving to O'Hare for a meeting is commuting to the airport unless the airport is the client site.

Pick your main base in writing in January. The rest of the split follows from that one decision. Counting the commute as business driving is the mistake that inflates a deduction and draws questions.

What Illinois does with the federal figure

The IRS publishes one standard mileage rate per tax year: 70 cents per mile for 2025. It stands in for gas, insurance, repairs, and depreciation when you use the standard method.

Illinois publishes no mileage rate of its own. The Illinois Department of Revenue starts with your federal adjusted gross income on Form IL-1040, then adds and subtracts.

So the car expense you deduct on federal Schedule C carries into your Illinois return through that starting figure. A sole proprietor has no separate Illinois car expense line.

Choose actual expenses instead and you owe receipts plus a depreciation schedule. The standard rate is simpler, and most Chicago consultants with one car take it.

Illinois disallows the commute for the same reason the IRS does: the state begins where the federal return ends.

Run the business through an S corporation or partnership and the car expense sits on the business return, reaching you on Schedule K-1. Illinois still follows the federal number.

Your state business tax picture changes if you also bill clients in Indiana or Wisconsin. Those miles belong in the same federal log, but the income may be apportioned between states.

How Chicago vehicle taxes relate to mileage

Chicago levies no income tax on individuals. It raises revenue through transaction taxes, and two of them touch consultants who drive.

The personal property lease transaction tax applies at 9% to leases of personal property used in Chicago, vehicles included. Lease a car for the consulting business and use it in the city, and the tax can attach to the payments.

The ground transportation tax applies to rides beginning in Chicago and to certain vehicle rentals. Take a ride-hail from a downtown client and the tax is already built into the fare.

Parking and garage taxes apply in parts of the city, including the central business district. These are costs of doing business, not deductions.

The point for a consultant: city taxes change what a leased car and a ride cost. They do not change how the mileage deduction is computed. That calculation is federal, and Illinois follows it.

Reimbursements work differently. Mileage a client repays under an accountable plan is not taxable income, and you do not deduct those miles. The IRS explains how government entities handle mileage reimbursement in its guidance on federal, state and local governments.

Keep city tax receipts with your business records. They support the expense side of Schedule C even though they never enter the mileage calculation.

A log that keeps the commute out of the deduction

A log earns its keep only if the commute and the client trips sit in separate rows on the same day. One row per trip, not one row per day.

Then work the log weekly:

Compare actual car expenses with the standard mileage method using a consistent log. Consistency beats detail: a plain spreadsheet with one row per trip can outperform a polished app you stop opening in March.

Check the log each quarter: the trips first, then the categories, then the method. Mislabeled trips get caught before they reach the return.

Records that hold up when someone asks

The recordkeeping rules come from the IRS and apply whether or not Illinois ever asks. The IRS covers car expense records in Topic no. 510.

For a small business, Publication 583 sets out what supports a deduction and how long to keep it.

Car and truck expenses go on Schedule C, line 9. The IRS lists the form's expense categories in its guide to Schedule C.

Illinois runs no separate mileage audit, but a federal exam can reach the Illinois return through the starting figure. Keep the records supporting your mileage deduction for at least three years after filing, and longer if you claimed depreciation; the separate business meals deduction limit for small business does not change that.

Before you file:

Run the home office deduction simplified vs regular method before signing the return. Ten minutes closes the gaps a reviewer would find.

Lease a car used in Chicago and the lease agreement and city lease tax receipts belong with the log. Use actual expenses and you need fuel, insurance, and repair receipts for the business-use percentage.

A reviewer wants the miles and the dollars to agree.

For anything specific to your return, a licensed CPA, enrolled agent, or tax attorney is the right call, not a general guide.

Common questions

Can I deduct the drive from my apartment to my first client if I have no home office?

No. Without a home office or another main place of business, the first trip of the day is commuting. The commuting rule covers it.

Does Illinois use a different mileage rate than the IRS?

No. Illinois has no standard mileage rate for income tax. It starts with federal adjusted gross income, so the federal figure carries through.

Do I owe Chicago city income tax on consulting profit?

No. Chicago does not tax individual income. The city taxes that touch consultants are transaction taxes, such as the lease tax and the ground transportation tax.

How long should I keep a mileage log?

At least three years after you file the return claiming the deduction. Claim depreciation and you keep the records until the depreciation period ends.