Kentucky Mileage and Vehicle Tax Records (2026): No Bonus Depreciation, Section 179 Limits and Fully Autonomous Vehicles
General information, not tax or legal advice. Talk to your tax preparer or attorney about your situation.
Kentucky starts from federal adjusted gross income, so a self-employed driver's federal mileage deduction carries over, and 2025 income is taxed at 4%. Kentucky depreciation follows the IRC as of December 31, 2001, so there's no bonus depreciation, and Section 179 has its own limits. Since 2024, fully autonomous vehicles may operate without a human driver.
Kentucky's return follows federal adjusted gross income but keeps its own depreciation rules, which matter most if you buy a work vehicle. This guide covers what the Kentucky Department of Revenue and the Kentucky Revised Statutes say as of October 16, 2026.
The federal baseline every Kentucky driver starts from
Most vehicle deductions begin on your federal return. If you're self-employed, you can generally use the standard mileage rate or actual expenses for the business share of your car (IRS Topic 510). For 2026 the business rate is 72.5¢ per mile for January 1 to June 30 (IR-2025-128 / Notice 2026-10) and 76¢ per mile for July 1 to December 31 (IR-2026-29 / Announcement 2026-11) (IRS standard mileage rates). EVs use the same rates; see the 2026 EV mileage rate guide. Most employees can't deduct unreimbursed car expenses federally (Topic 510). IRS Publication 463 asks for each business trip's miles, date, destination and purpose, plus total miles. Commuting stays personal (commuting vs business miles).
How Kentucky treats vehicle deductions
The 2025 Form 740 instructions start from federal adjusted gross income on line 5 and set the 2025 rate at 4%. They say Kentucky's IRC reference date moved to December 31, 2024. A Schedule C vehicle deduction figured with the standard mileage rate is already reflected in federal AGI.
Depreciation: no bonus, separate Section 179 limits
The instructions say Kentucky depreciation under IRC Section 168, and the Section 179 deduction, follow the provisions in effect on December 31, 2001, so federal bonus depreciation doesn't apply. Schedule M explains the Section 179 limits: for property placed in service from 2001 through 2019, a Kentucky limit of $25,000 with a $200,000 phase-out. From 2020, the limit is $100,000 and the phase-out doesn't apply. You create a Kentucky Form 4562 and report the difference from federal depreciation on Schedule M, line 12. If you use actual costs for a vehicle, keep both schedules. See robotaxi fleet depreciation and Section 179.
Rideshare (TNC) rules in Kentucky
KRS 281.630 sets the application process for TNC authority with the Department of Vehicle Regulation, and the department's regulation 601 KAR 1:113 covers the TNC certificate, annual renewal (the bulk renewal fee is due by December 15 each year) and insurance. Whatever the company keeps, save your own trip receipts and annual summaries. See which rideshare miles count.
Robotaxis and autonomous vehicles in Kentucky
Kentucky's fully autonomous vehicle law (KRS 186.760 to 186.779, created by 2024 Ky. Acts ch. 176, effective July 15, 2024) is set out in KRS 186.760 and KRS 186.763. Under § 186.763, a fully autonomous vehicle may operate without a human driver if the automated driving system is engaged and the vehicle can achieve a minimal risk condition, follows traffic laws and meets federal safety standards. From July 15, 2024 until July 31, 2026, a fully autonomous vehicle whose declared gross weight, including any towed unit, was more than 62,000 pounds had to have a credentialed human driver present (KRS 186.763(2)). Before operating without a human driver, an operator submits a law enforcement interaction plan to the Transportation Cabinet and the Kentucky State Police. For fleet records, see robotaxi fleet tax basics.
What to keep in your Kentucky records
- Each business trip's date, start, destination, purpose and miles, plus total miles for the year (Pub 463); a weekly log counts as timely kept.
- Separate Business, Commute and Personal totals for Form 4562 Part V.
- Keep records until the period of limitations runs out, generally 3 years federally (IRS); ask your preparer about the state period.
- If you depreciate a vehicle: keep a Kentucky Form 4562 next to the federal one, with the Schedule M line 12 difference.
- For rideshare: download ride receipts and annual summaries for your federal Schedule C.
For the full list of log fields, see what the IRS asks you to record.
Example: 1,000 hypothetical business miles driven in September 2026 × 76¢ (IR-2026-29) = $760 at the federal standard rate. Miles driven in March 2026 would use 72.5¢ (IR-2025-128) instead, so keep each trip's date. Estimates, not tax advice.
One log for both returns
A Kentucky return doesn't call for a second mileage log; your preparer works from the same business, commuting and personal miles. CyberDeduct builds a mileage log around IRS Pub 463 from your Tesla's own trip and odometer data (Model S, 3, X, Y and Cybertruck). You connect your Tesla account once through Tesla's standard account sign-in (OAuth); CyberDeduct never sees or stores your password. Home/work rules and route templates label most trips Business, Commute or Personal; you tap to change any label and confirm the purpose. The dashboard shows your business-use percentage and warns you on the 28th if you're under 50%. You export a PDF or CSV log plus a Form 4562 Part V worksheet for your preparer. See how the log is built or see plans.
Sources (checked October 16, 2026)
- Kentucky Department of Revenue, 2025 Form 740 instructions
- Kentucky Department of Revenue, 2025 Schedule M
- KRS 186.760
- KRS 186.763
- KRS 281.630
- 601 KAR 1:113
- IRS, Standard mileage rates; IRS Publication 463; IRS Topic 510
Frequently asked questions
Does Kentucky use my federal mileage deduction?
Generally yes for the self-employed. Form 740 starts from federal adjusted gross income, which already reflects Schedule C vehicle expenses.
Does Kentucky allow bonus depreciation?
No. Kentucky depreciation follows the IRC as of December 31, 2001, so you figure Kentucky depreciation on a separate Form 4562.
What is Kentucky's Section 179 limit?
Schedule M says $100,000 with no phase-out for property placed in service from 2020, and $25,000 with a $200,000 phase-out for 2001 through 2019.
Are driverless cars legal in Kentucky?
Yes. KRS 186.763 lets fully autonomous vehicles operate without a human driver if they meet its conditions and the operator files a law enforcement interaction plan.
Who licenses Kentucky rideshare companies?
The Department of Vehicle Regulation, under KRS 281.630 and 601 KAR 1:113.
This article is general information, not tax or legal advice. Talk to your tax preparer or attorney about your situation. State laws and bill status change; check the linked sources for the current text.
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