Is Car Insurance Tax-Deductible?

Whether you can claim car insurance as a deduction depends on how you use your vehicle.
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Ava Lynch

Insurance Analyst

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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 2021 was 56 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.

Use of Vehicle Avg. Annual Premium
Pleasure $1,760
Business $2,012

The Zebra’s Dynamic Insurance Rating Tool data methodology

The Zebra’s Dynamic Insurance Rating Tool for home and auto insurance rates utilizes the latest ZIP code-level rate filings from across the U.S., sourced from Quadrant Information Services and S&P Global. These filings, typically updated annually or biennially by insurers, are verified through Quadrant’s QA process and then integrated into The Zebra’s estimator.

The displayed rates are based on a dynamic home and auto profile designed to reflect the content of the page. This profile is tailored to match specific factors such as age, location, and coverage level, which are adjusted based on the page content to show how these variables can impact premiums.

For a comprehensive understanding, see our detailed methodology.

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.

Protect your car with the right coverage at the best value.

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About The Zebra

The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.

  • The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
  • The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
  • The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
  • The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.