Can you deduct car insurance from your taxes?


If you use your vehicle for business purposes and have a business use car insurance policy, you can deduct your car expenses as business expenses. The finer details — including business-use car insurance and the paperwork required to claim a deduction for auto insurance costs — are outlined below.


How to deduct car insurance on tax returns

There are several ways to claim auto insurance expenses as a tax deduction. While we provide a brief summary of car insurance-related deductions, we recommend consulting a tax professional. When it comes to your taxes, you do not want to take any chances.


Use the standard deduction

The standard mileage rate for business use of a vehicle in 2020 was 57.5 cents per mile. Learn more about the IRS' standard mileage rate for taxes


Calculate your own driving expenses

You will need to track your vehicle expenses, including auto insurance and gas purchases. This will come in handy when you file (and if you ever face an audit).

If you’re self-employed and filing a Schedule C, a tax break on your insurance costs is usually available. The Schedule C form is for reporting income or loss from a business you operated or are the sole proprietor of.

If you’re employed by a company and use your own vehicle, you can file a Form 2106 Employee Business Expenses. Form 2106 simply refers to filing any and all expenses that are helpful and important for the business. You cannot file this if you are compensated directly by your company.

If you use your vehicle for business and personal reasons, you will need to establish and prove the usage breakdown. When it comes time to file your taxes, you’ll only be able to deduct the business-related vehicle expenses. This can be fairly complicated, so consider consulting a tax professional to avoid any issues.


What is business-use auto insurance?

The only way to claim car insurance as a deduction on your tax return is if you utilize your vehicle for business purposes. A business-use policy — more commonly referred to as commercial auto insurance — is defined rather vaguely. Usually, it involves using your standard vehicle, i.e., not a work truck, for personal and business uses. For example, a door-to-door salesperson.

Each insurance company defines business use differently. So, if you’re uncertain, speak to your insurance agent. This will be important for determining if you qualify for the right deduction but making sure you're covered for your business-related driving needs.

Get started by receiving a commercial auto insurance quote from our trusted partner, Progressive.


How much does business-use car insurance cost?

Business-use insurance is usually more expensive than a standard personal policy. On average, a business-use auto insurance policy costs 10% more than a pleasure-use policy.

Vehicle Use

Annual Car Insurance Rate

Business use


Pleasure use



Taxes and car insurance: Summary

The only time you can consider your car insurance a tax deduction is if you use your vehicle in a professional and business capacity. If you do, you should consult a tax professional well before tax season. Document your motor vehicle expenses well before tax season.

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Ava Lynch
Ava Lynch LinkedIn

Ava worked in the insurance industry as an agent for four-plus years. Currently providing insights and analysis as one of The Zebra’s resident property insurance experts, Ava has been featured in publications such as U.S. News & World Report, GasBuddy, and Yahoo! Finance.