Is gas a business expense?

What is a gas expense?

Gas expenses include the costs your business pays for fuel or natural gas used in operations. This can cover gasoline or diesel for company vehicles, propane or gas for equipment, and natural gas used to heat offices, warehouses, or factories. These are recurring costs that keep your business moving and your facilities running.

How to categorize gas expenses

• Record as Operating Expenses in your income statement.
• Use a dedicated “Gas” or “Fuel” account in your chart of accounts.
• If applicable, split costs by vehicle, department, or location for better tracking.
• For personal or mixed-use vehicles, deduct only the business-use portion of total fuel costs.
• Include fuel used directly in production (e.g., factory equipment or generators) in COGS, if relevant.

Examples of gas expenses

• Vehicle Fuel: Gasoline or diesel for company cars, trucks, or delivery vehicles.
• Natural Gas: Utility costs for heating offices, warehouses, or production facilities.
• Equipment Fuel: Propane or gas used for generators, forklifts, or machinery.
• Business Travel Fuel: Reimbursable fuel costs for employee trips or site visits.
• Fleet Fuel Cards: Centralized accounts for managing vehicle fuel purchases.

Tax implications for gas expenses

• Gas used exclusively for business purposes is generally 100% tax-deductible.
• For home offices, only the business-use portion of natural gas or heating bills qualifies for deduction, usually based on square footage or time of use.
• If using a personal vehicle, maintain mileage logs, receipts, or fuel card statements to substantiate deductions.
• You can choose to deduct either actual fuel costs or use the IRS standard mileage rate, whichever provides the greater benefit.
• Always keep clear documentation and invoices in case of an IRS audit.
• Some states may also offer sales tax exemptions for gas used directly in manufacturing or resale activities.