Minnesota Mileage and Vehicle Tax Records (2026): Employee Expenses, 80% Bonus Add-Back and TNC Driver Pay
General information, not tax or legal advice. Talk to your tax preparer or attorney about your situation.
Minnesota starts from federal adjusted gross income, so a self-employed driver's federal mileage deduction carries over. Minnesota adds back 80% of federal bonus depreciation, then subtracts it over five years. If you itemize in Minnesota, employees can deduct unreimbursed job expenses above 2% of AGI. Rideshare companies must pay per-mile and per-minute minimums.
Minnesota keeps two vehicle rules the federal return dropped or changed: a deduction for employee job expenses and a bonus depreciation add-back. This guide covers what the Minnesota Department of Revenue, the Department of Labor and Industry and Minnesota Statutes say as of October 16, 2026.
The federal baseline every Minnesota 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 Minnesota treats vehicle deductions
The 2025 Form M1 instructions start the return with federal adjusted gross income on line 1, so a Schedule C vehicle deduction is already reflected.
Unreimbursed employee expenses
Federal law no longer allows most employees to deduct unreimbursed job expenses, but Minnesota does. Minn. Stat. § 290.0122, subd. 7 allows a deduction for an employee's trade or business expenses under IRC 162 above 2% of AGI. You claim it on Schedule M1SA, lines 20 to 23, and attach Schedule M1UE. M1SA only helps if your Minnesota itemized deductions are more than your standard deduction. On the 2025 M1UE, vehicle expenses use either actual costs or business miles × 70¢, and the form asks when the car was placed in service and whether it was available for personal use. You can't deduct expenses for which you could have been reimbursed but didn't claim. This rule matters if you drive for an employer that doesn't reimburse mileage.
Depreciation: the 80% add-back
The department's bonus depreciation page says you add back 80% of allowable federal bonus depreciation, then subtract 20% of that addition in each of the next five years. You report it on Schedule M1MB. Its Section 179 page says the similar 80% Section 179 addition applied to property placed in service in tax years beginning before January 1, 2020. See robotaxi fleet depreciation and Section 179.
Rideshare (TNC) rules in Minnesota
Minn. Stat. § 181C.03 requires minimum driver pay of $1.28 per mile and $0.31 per minute while transporting a rider, plus $0.91 per mile in a wheelchair-accessible vehicle. The Department of Labor and Industry's TNC page says these rise to $1.33, $0.32 and $0.95 on January 1, 2027. The same page says the company must give you a receipt within 24 hours of each trip, showing time and miles from pickup to drop-off and from acceptance to completion. Each week, you get a summary of logged-in time, miles and pay. The company keeps those records at least three years. Those en route and on-trip miles match up with the business miles in your log. See which rideshare miles count.
Robotaxis and autonomous vehicles in Minnesota
This guide doesn't cover Minnesota autonomous vehicle rules. If you're planning a driverless fleet in Minnesota, check MnDOT's current guidance and talk to an attorney. For fleet records, see robotaxi fleet tax basics.
What to keep in your Minnesota 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're an employee: keep employer reimbursement policies and any reimbursements received, since Schedule M1UE asks for them.
- For rideshare: keep the 24-hour trip receipts and weekly summaries; they show en route and on-trip miles.
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 Minnesota 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)
- Minnesota Department of Revenue, 2025 Form M1 instructions
- Minnesota Department of Revenue, 2025 Schedule M1SA
- Minnesota Department of Revenue, 2025 Schedule M1UE
- Minn. Stat. § 290.0122
- Minnesota Department of Revenue, Bonus depreciation
- Minnesota Department of Revenue, Section 179 expensing addition
- Minn. Stat. § 181C.03
- Minnesota Department of Labor and Industry, TNC drivers
- MnDOT, Connected and Automated Vehicles
- IRS, Standard mileage rates; IRS Publication 463; IRS Topic 510
Frequently asked questions
Does Minnesota use my federal mileage deduction?
Generally yes for the self-employed. Form M1 starts from federal adjusted gross income, which already includes Schedule C vehicle expenses.
Can Minnesota employees deduct unreimbursed mileage?
Yes, if you itemize on Schedule M1SA. Minn. Stat. § 290.0122, subd. 7 allows unreimbursed employee expenses above 2% of AGI, figured on Schedule M1UE.
How does Minnesota handle bonus depreciation?
You add back 80% of federal bonus depreciation and subtract 20% of that addition in each of the next five years (Schedule M1MB).
What is the Minnesota TNC minimum pay?
$1.28 per mile and $0.31 per minute under § 181C.03, rising to $1.33 and $0.32 on January 1, 2027, per the Department of Labor and Industry.
How long do Minnesota TNCs keep ride records?
At least three years, including trip receipts and weekly summaries, per the Department of Labor and Industry.
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.
CyberDeduct is an independent product of LIKE LLC and is not affiliated with or endorsed by Tesla, Inc. Tesla is a trademark of Tesla, Inc.