When is Car Insurance Tax-Deductible?
You can deduct the cost of car insurance from your taxes if you use your car as part of your work and you have one of a few specific jobs.
Workers who can write off their car insurance include: people who are self-employed or own a business, people in the military reserves, certain performing artists and some kinds of government employees.
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. The same is true if your company pays you a per-mile rate or other reimbursement for using your own car.
Find Cheap Auto Insurance Quotes in Your Area
When is your auto insurance premium tax-deductible?
There are three requirements for you to be able to deduct car insurance premiums from your income taxes.
1. You need to have the right type of job
The IRS only allows you to deduct insurance or other vehicle-related expenses if you have one of the following kinds of jobs:
- Freelancer, self-employed or business owner
- Military reservist, such as Army National Guard
- Certain kinds of performing artist, including actor or singer
- Fee-basis state or local government official
If you're a regular employee of a business and don't fall into any of these categories, you can't deduct car insurance from your taxes.
2. You have to use your own car for work-related tasks
Simply driving to and from your regular office doesn't count.
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
3. You can only deduct business travel expenses that you pay out of pocket
If you're a freelancer and a client pays you $1 per mile when you drive to a meeting, you can't also deduct the cost of that travel from your net income for the year.
Also, if you use your car half of the time for work trips and half of the time for personal errands, you can only deduct half the cost of your car insurance from your taxes.
How to write off car insurance for your personal vehicle
There are two methods to calculate your business travel-related expenses. You can use whichever one saves you more money.
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.
You can 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.
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 of them offer the option to speak with trained accountants, though it usually costs extra.
Find Cheap Auto Insurance Quotes in Your Area
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.
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 2025, this included the wildfires in Los Angeles, as well as 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 fire during the Los Angeles wildfires.
- 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, rideshare drivers and business owners who use their car for work should use Schedule C to write off their auto insurance payments.
About the Author
Senior Writer
Lindsay Bishop is a Senior Writer at ValuePenguin, where she educates readers about home, auto, renters, flood and motorcycle insurance.
Lindsay began her career in the insurance and financial industry in 2010. She was a licensed auto, home, life and health insurance agent and held Series 6 and 63 financial licenses.
After a hiatus from the financial sector, Lindsay returned to the industry as a content writer for ValuePenguin in 2021. She enjoys having the opportunity to help readers make smart decisions about their insurance so they can be prepared for anything life throws their way.
When Lindsay isn't writing about insurance, you can find her spending time with family, enjoying the outdoors on Sunday long runs or riding her Peloton.
How insurance helped Lindsay
As a homeowner for 15 years located in South Carolina, Lindsay has plenty of experience navigating the coastal insurance market and managing the claims process. That includes successfully negotiating a full roof replacement claim.
Expertise
- Home insurance
- Car insurance
- Flood insurance
- Renters insurance
- Motorcycle insurance
Referenced by
- CNBC
- Yahoo Finance
- Miami Herald
Education
- BS/BA Economics, University of Nevada Las Vegas
Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.
