What is mileage tax deduction?
Transportation deduction – or mileage tax deduction – is a deduction you are entitled to if your transportation distance to and from work exceeds 24 kilometers.
You can receive the deduction if your work is more than 12 kilometers away from your residence.
You can register mileage automatically with Acubiz
Automatic registration of your mileage via your phone saves you both time and money.
Remember that you cannot receive both mileage allowance and mileage tax deduction. Unlike mileage allowance, mileage tax deduction is not paid but is included in your annual statement.
The value of the deduction is approximately 26%. If your mileage tax deduction is 1,000 kroner, your tax savings will be 260 kroner.
When are you entitled to the deduction?
You are only entitled to mileage tax deductions when you have to drive to and from work. You are not entitled if you work from home, attend a course, are sick, are on leave, etc.
It does not matter which transportation you use to get to and from work. You can also claim the deduction if you take the bus, car, train, or bicycle.
However, your work must be paid. This includes part-time jobs, paid internships, and wage subsidies.
You cannot receive a transportation deduction if
- Your work is unpaid.
- You drive to and from your study. SU does not count as pay.
- Your employer pays for transportation (for example, by paying for a commuter pass for the employee).
- You have a company car at your disposal.
Rates for mileage tax deduction
The rates for transportation tax deduction change every year. In 2023, they are as follows:
- Transportation between 0-24 kilometers per day: No deduction.
- Transportation between 25-120 kilometers per day: 2.10 DKK. It had increased from 2022, when it was 1.98 DKK.
- Transportation over 120 kilometers per day: In outlying municipalities, the deduction is the same as between 25-120 kilometers (2.10 DKK). In the remaining municipalities, the figure for 2023 is 1.10 DKK per kilometer per day. It had increased from 2022, when it was 0.99 DKK.
The rapidly increasing gasoline prices during 2022 are the reason why the tax council has extraordinarily raised the rates for the mileage tax deduction. They are retroactively valid from January 1st. You can read more about it here.
Extra transportation tax deduction for income under 353,000 kroner
You can get an additional transportation tax deduction if you earn less than 353,000 DKK in 2023.
In 2023, the deduction can be a maximum of 15,400 DKK. It is gradually reduced for incomes above 303,000 DKK to 353,000 DKK.
You do not have to calculate the transportation tax deduction yourself; you just have to enter your mileage deduction on the calculation on Skat.dk, where Skattetyrelsen automatically calculates the extra transportation tax deduction you are entitled to.
Mileage tax deduction as a self-employed person
Are you a self-employed business owner? Then you can get a deduction for business-related travel in your own car by deducting the deduction in the company scheme.
As a self-employed person, you can get a tax deduction for several expenses related to the business. This also applies to travel related to work.
One requirement for getting a mileage tax deduction as a self-employed person is that you must drive your own car on white plates. You can deduct the deduction from your income, so you pay less in taxes, where the deduction covers expenses for driving your own private car in connection with tasks for work.
Read more about the requirements below.
Requirements for eligibility for a deduction for business-related travel in your own car
To be eligible for a mileage tax deduction as a self-employed person, it is necessary to keep a driving log where you enter specific information to account for the driving as a deduction.
You can decide how to record the information in your driving log. The only requirement is that the following information appears:
- Name, address, CPR or CVR number
- Date of travel
- Kilometer reading when the journey starts
- Kilometer reading when the journey ends
- Destination and any intermediate stops
- Total kilometers
- Driving rate
- Calculation of mileage tax deduction
How to claim the mileage tax deduction?
If you have more than 24 kilometers to and from work, you must report it to Skattesstyrelsen on your preliminary or annual assessments. Here, you should enter your official residential address and your work address.
If you usually get the Mileage Tax Deduction, your mileage will likely be automatically reported. But if one or more of your circumstances change, remember to adjust your calculation. This may be the case if you move, change jobs, or have more work-from-home days due to, for example, COVID-19.
Do you want to know more?
Calculate your Mileage Tax Deduction using the calculator tool on Borger.dk.
With Acubiz, you can keep a digital mileage log on your phone with automatic updates of rates according to Skattestyrelsen’s rules. This ensures accurate calculations while also saving you from cumbersome spreadsheets. Instead, you can easily record your business-related trips and have them at your fingertips – even when you’re on the go.
Contact us if you want to know how we can help your business or book a free online demo to learn more.