Your real cost per mile
Print this page, or copy the lines onto the back of an envelope. Fill in the boxes on the left from your own paperwork; the margin shows one illustrative car worked through, so you can check your method against ours.
Cost per mile is the most portable number in car budgeting. It lets you compare a commute against a transit pass, price a road trip honestly, or decide whether a second car earns its keep. Most people only ever see the fuel part of it. The sheet below gathers everything else and divides by the same miles.
Use one year as the period. Where a cost is lumpy — tires, a big repair — spread it over the years it covers. The worked example is an invented car and household with round numbers; none of its figures are averages or typical costs, just inputs for the arithmetic.
Odometer now minus odometer a year ago. Service receipts and inspection records usually print the reading.
A ÷ your real mpg × your average price per gallon. For an EV: A ÷ 100 × kWh per 100 miles × your rate. Official ratings for most models are on fueleconomy.gov; your own receipts are better.
= 400 gal × $3.40$1,360
The annual premium for this car from your declarations page. On a multi-car policy, use the per-vehicle breakdown, not the total.
Last renewal notice. If you renew every two years, halve it. Amounts vary by state; your motor vehicle agency's site lists yours.
Every service and repair receipt from the year. If last year had one unusual big repair, consider averaging two or three years instead.
Price of a set ÷ the miles a set lasts you × A.
= $0.016/mi × 12,000$192
What the car is worth today minus what you expect it to be worth a year from now. Look up comparable listings now, and for the same car one model year older; the gap is a fair estimate.
Interest paid this year, not the full payment — the principal is already counted inside G. Your lender's year-end statement shows it. Zero if you own the car outright.
Card statements are the only reliable record. Skim twelve months.
+ 192 + 2,400 + 780 + 360$7,592
Only the costs that rise when you drive more.
= 2,152 ÷ 12,000$0.18 / mi
Two numbers, two jobs
The sheet ends with two answers on purpose. Line K is the average cost: everything the car consumed in a year, divided across every mile. In the example it's about 63 cents. Line L is the marginal cost: what an extra mile adds, given that the car is already sitting in the driveway, insured and registered. In the example it's about 18 cents.
Use K when the question is whether to own this car at all. If a household could cover its 12,000 miles another way for less than $7,592 a year, the car is costing more than its job is worth. Use L when the car is a settled fact and the question is a single trip: driving 300 miles to a family event costs this household roughly $54 in wear and fuel ($0.18 × 300 is $53.80), not the $190 that the average figure would suggest.
The two figures get confused all the time, usually in the direction that flatters the car. Comparing a train fare to fuel alone uses a marginal cost that ignores wear. Comparing a rideshare bill to the full 63 cents overstates what you'd save by leaving the car at home once, because insurance and depreciation carry on regardless. Pick the number that matches the decision.
Where the sheet bends
Depreciation is partly per-mile. A car loses value with age and with miles. Treating all of G as fixed, as line L does, slightly understates the marginal cost of a high-mileage year. If you drive far more than usual, move some of G into L.
Maintenance is partly fixed. Some services fall due by the calendar rather than the odometer. The owner's manual says which.
The IRS rate is a different animal. The IRS publishes a standard mileage rate each year for business, medical and some other uses of a personal car. It's set for tax purposes across all vehicles and is not a measurement of your car. For its current value and the rules on using it, see irs.gov; for how car costs interact with taxes more broadly, car expenses and taxes: the basics points to where to confirm the details.
Two cars, two sheets. A household with two cars should fill in one sheet per car. Averaging them together hides the fact that one car is often far more expensive per mile than the other, which is exactly the fact that tells you which one to drive for the long trips.
Filled in once, the sheet is a snapshot. Filled in each year on the same date, it becomes a record of how the car's economics shift as it ages — depreciation shrinking, maintenance growing — which is the evidence you'll want when deciding when to trade in.
Keep reading
Further reading
- Standard mileage rates IRS
- Publication 463: travel, gift and car expenses IRS
- Budgets, explained Investopedia