When is Car Insurance Tax-Deductible?
If you use your car for business, you can deduct some or all of your insurance expenses from your taxes.
This includes self-employed business owners, contractors, freelancers and people who drive for their job but aren't reimbursed by their employer.
However, you typically can't write off your car insurance if you simply commute to and from work or use your car for pleasure or day-to-day tasks, like running errands.
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When is your auto insurance premium tax deductible?
You can write off your car insurance payments if you drive your car for business purposes and you:
How to write off car insurance for your personal vehicle
The car insurance premiums for your personal vehicle are only tax deductible if you drive it for business purposes. Some common examples include:
- Working for Uber, Lyft or another rideshare or delivery service
- Driving to meet clients, pick up business supplies or check on job sites
- Traveling to and from your rental property
- Driving to work as a freelancer
You may deduct your insurance from your taxes for the percentage of time you use your car for business. That means you'll need to keep track of both your business and personal mileage throughout the year.
You should hold onto your driving records for at least three years. If the IRS ever asks you to justify your car insurance tax write-offs, you will need to show proof.
Using your car to commute to and from work as a regular employee doesn't qualify as a business expense, so these trips aren't tax deductible.
You also can't write off your car insurance if your business or employer already reimburses you.
You can either use the standard mileage rate or your actual expenses to write off your auto insurance premium.
If you've kept good records, you should try calculating your deduction using both methods. Then, you can choose the larger amount as your tax write-off.
Remember that you can only write off insurance expenses if your total deductible expenses are higher than the standard deduction.
Car insurance rarely costs more than a couple thousand dollars a year. As a result, you usually need more deductions, such as business expenses, mortgage interest or certain education expenses, to qualify for itemized deductions.
2025 standard deduction
Filing status | Standard deduction |
|---|---|
| Single and married couple filing separately | $15,000 |
| Married couple filing jointly | $30,000 |
| Head of household | $22,500 |
It's best to do your taxes correctly the first time: A few dollars saved is not worth the time and expense of a possible audit.
If you're unsure whether you're eligible to deduct your car insurance from your income taxes, talk to an accountant or someone well-versed in tax law. If you're doing your taxes using an online service like TurboTax, many offer the option to speak with trained accountants, though it may cost extra.
How to write off insurance as a rideshare driver
If your state and insurance company allow you to use your personal insurance for rideshare or delivery driving, you can deduct a portion of your car insurance premium. You can calculate your deduction by dividing your monthly car insurance payment by the percentage of time you use the car for ridesharing.
For example, if you drive two hours daily running personal errands and then drive three hours for Lyft at night, you can say you use your car for ridesharing 60% of the time. So if your monthly car insurance bill is $120, you can deduct $72 per month, or $864 per year.
In addition, if you have special rideshare insurance that goes into effect while you're driving others or doing deliveries, you can deduct the entire cost of that coverage from your taxes.
How to write off car insurance for your business vehicle
If you own a car you use exclusively for your business, then all costs related to your vehicle — including insurance, gas and maintenance — are deductible as business expenses.
For example, say you're a self-employed contractor with a work truck that you only drive to job sites and the hardware store. Since your truck is only used for those business purposes, you can write off the full cost of your car insurance.
Self-employed individuals can write off insurance for their business vehicles using a Schedule C tax form. This form includes a section for your deductible insurance expenses.
However, you can only write off your car insurance expenses if your total deductions — including all business expenses, mortgage interest, child care expenses and other deductions — are greater than the standard deduction. Most business owners should consider working with an accountant to make sure they're taking advantage of all of their deductions.
Can you write off your car insurance deductible?
Typically, you can only write off your car insurance deductible for a car that you only use for business purposes. You generally can't write off the deductible for your personal vehicle.
The one exception is if a severe weather event damages your car after the government has declared a state of emergency.
In 2024, this included some areas affected by Hurricanes Helene and Milton and Tropical Storm Debby. It also includes severe storms in several other states.
If one of these disasters damaged or destroyed your car, you can write off the loss on your taxes. However, you can't write off any loss you were compensated for (by insurance, for example). You can only do this for the dollar amount you actually lost. This typically includes your car insurance deductible or any repairs not covered by insurance.
Additionally, you must subtract $500 from the loss amount to determine how much you can write off.
For example, suppose you had a car worth $15,000 that was destroyed by flooding during Hurricane Helene.
- If you had comprehensive coverage — which covers flood damage — with a deductible of $1,000, your insurance company would pay you $14,000. You'd subtract $500 from the deductible, and you could write off the remaining $500 on your taxes.
- If you didn't have comprehensive coverage, you wouldn't get any money from the insurance company. So you'd be able to write off the entire value of the car, minus $500, or $14,500.
Frequently asked questions
Can I deduct car insurance on my taxes?
You can deduct all or a portion of your car insurance on your taxes if you drive your car for business purposes. This includes business owners, contractors or freelancers and people who drive for work and aren't reimbursed by their company. However, it doesn't include commuting to and from work.
Is car insurance tax deductible for self-employed people?
Yes, car insurance is typically tax deductible if you're self-employed. If you have a dedicated business vehicle, you can write off your entire insurance premium. On the other hand, if you drive your personal vehicle for work, you need to keep track of your business and personal miles to calculate the percentage of your insurance that's tax deductible.
Can I deduct car insurance on Schedule C?
Yes, business owners and rideshare drivers should use Schedule C to write off their auto insurance payments, as long as their total deductions are greater than the standard deduction.
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