Costs
Tax deduction mileage in Texas, Florida and Washington
Tax deduction mileage in Texas, Florida and Washington: how franchise, corporate income and B&O taxes decide whether a mileage claim cuts your state bill.
What to take away
- The business mileage rate is federal. Texas, Florida and Washington firms claim the same rate on the same business miles.
- A mileage deduction cuts a tax only when that tax is computed on net income. It lowers your federal bill in all three states.
- Texas adds franchise tax on margin and local property tax on vehicles. Florida adds a 5.5% corporate income tax above a $50,000 exemption.
- Washington taxes gross receipts through B&O, so the mileage deduction never reaches that base.
The federal rate does not change at the state line
Every business in the three states applies the same IRS rate to the same business miles. A state address changes nothing on the federal return.
Standard mileage and actual expenses are the two methods. IRS Publication 463 explains how each works and how the first-year choice restricts the later ones.
The IRS sets the business rate each December. For 2025 the business rate is 70 cents a mile, and later years are published in the same IRS table. Take the current figure from that table rather than a summary.
The year a vehicle entered service also fixes which rate applies. Reading mileage rates with a sceptical eye shows how one summary column hides that.
Texas: franchise tax, property tax and a federal-only deduction
Texas has no personal income tax, so a sole proprietor in Austin or Lubbock pays federal tax on net profit and nothing to the state.
The franchise tax, called the margin tax, applies to most entities above a revenue threshold. It is imposed by Chapter 171 of the Texas Tax Code and administered by the Texas Comptroller of Public Accounts. Reports covering 2024 and 2025 carried a no tax due threshold near $2.47 million in annual gross receipts.
Margin is a revenue measure, so a mileage deduction does not reduce it.
Local appraisal districts tax business personal property, and business vehicles usually sit on that roll. A bigger fleet raises the appraisal with no income tax to offset it.
A heavy SUV over 6,000 pounds can be expensed under Section 179, which IRS Publication 946 sets out with the limits.
Records a Texas owner should keep
Keep these with no state return to file.
Texas Mileage Documentation Checklist
- Date, destination and business purpose for each trip
- Odometer readings at start and end of year
- Total miles driven and total business miles
- Receipts for fuel, insurance, repairs and parking
- Written record of first business use year
- A log with date, destination, business purpose and odometer at the start and end of each trip.
- Receipts for fuel, insurance, repairs, tires and the purchase, lease or loan.
- County appraisal district renditions listing each vehicle used in the business.
Keep the log clean from the first trip: why counting the commute tops the list of mileage rate mistakes covers the most common error.
Florida: the corporate income tax is the only base mileage can reach
Florida has no personal income tax, so a sole proprietor or an LLC taxed as one gets no state benefit from a mileage deduction.
A C corporation pays 5.5% on net income, with the first $50,000 exempt under recent terms. The tax is set in Chapter 220 of the Florida Statutes and administered by the Florida Department of Revenue, which receives the corporate income tax return, Form F-1120. On the example below, a $17,000 mileage claim cuts that bill by about $935.
Washington: B&O tax on gross receipts ignores mileage
Washington has no personal income tax and no corporate income tax. It taxes gross receipts instead.
The B&O tax applies to business activity in the state under RCW 82.04.220. The Washington Department of Revenue's Business and occupation tax page lists the classifications and rates.
Rates run from about 0.13% to 1.75% by classification, with service work near the top. A small business credit can wipe out the tax for lower-revenue filers, set in recent years at roughly $125,000 of taxable gross income.
Side-by-side view of the three state taxes
Texas
- Personal income tax
- None
- Business level tax
- Franchise (margin) tax
- Taxed on
- Margin
- Mileage deduction reduces it
- No
Florida
- Personal income tax
- None
- Business level tax
- Corporate income tax
- Taxed on
- Net income
- Mileage deduction reduces it
- Yes, for corporations
Washington
- Personal income tax
- None
- Business level tax
- Business and occupation tax
- Taxed on
- Gross receipts
- Mileage deduction reduces it
- No
Texas, Florida, Washington Business Taxes
Texas
- Personal income tax
- None
- Business-level tax
- Franchise (margin)
- Taxed on
- Margin
- Sales tax
- State and local
- Vehicle property tax
- Yes, locally appraised
Florida
- Personal income tax
- None
- Business-level tax
- Corporate income
- Taxed on
- Net income
- Sales tax
- State and county surtax
- Vehicle property tax
- Yes, locally assessed
Washington
- Personal income tax
- None
- Business-level tax
- B&O tax
- Taxed on
- Gross receipts
- Sales tax
- State and local
- Vehicle property tax
- Yes, locally assessed
Where a state taxes net income the claim helps twice. Where it taxes gross receipts it helps once. 7 points worth checking on state business tax covers the rest.
Example: one consultant, three state outcomes
A consultant bills $250,000 with $70,000 of expenses, including a $17,000 mileage deduction on 25,000 business miles at about 70 cents. Federal net profit is $180,000.
At a 24% federal marginal rate the claim saves about $4,080, the same in all three states.
Texas: no personal income tax, and franchise tax does not apply at this revenue level. Saving from mileage, $0.
Florida: a sole proprietor saves $0. A C corporation pays 5.5% on net income above $50,000, so the $17,000 deduction cuts its state bill by about $935.
Washington: B&O applies to the $250,000 gross at about 1.75% for service work, or $4,375 before any credit. Saving from mileage, $0.
Ranking the three states for a vehicle-heavy owner
- Florida, for a sole proprietor or an LLC taxed as one. No state income tax reaches the profit, and the mileage deduction lowers the only income tax that applies.
- Texas, for a sole proprietor. No state income tax, but vehicle property tax and franchise tax on margin dilute the gain.
- Washington, for a sole proprietor. B&O tax on gross receipts keeps the mileage deduction at the federal level.
- For a C corporation, Florida moves further ahead because the 5.5% tax follows net income.
Records that survive a multi-state review
- State coded mileage logs, with odometer readings taken as a vehicle crosses a state line.
- An apportionment worksheet that assigns gross receipts to Washington and net income to Florida.
- Registration, insurance and lease documents for each vehicle, matched to the state where it sits.
A Texas owner serving Seattle clients may owe B&O on that revenue. Which state business tax services cover your state helps when filing crosses state lines.
