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Is car insurance tax deductible?

If you use your car for work-related purposes then you might be able to deduct car insurance from your taxes. But if you are purely using your car for personal reasons, then no.

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By

Rachael BrennanSenior Editor & Licensed Auto Insurance ExpertRachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Edited by

Anna SwartzAnna SwartzSenior Managing Editor & Auto Insurance ExpertAnna Swartz is a senior managing editor and auto insurance expert at Policygenius, where she oversees our car insurance coverage. Previously, she was a senior staff writer at Mic.com, as well as an associate writer at The Dodo.
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Reviewed by

Amy Northard, CPAAmy Northard, CPACertified Public AccountantAmy Northard, CPA, is a certified public accountant and a member of the Financial Review Council at Policygenius. Previously, she served as a certification administrator for the National Association of Mutual Insurance Companies (NAMIC).

Updated|3 min read

Expert reviewedExpert reviewedThis article has been reviewed by a member of ourFinancial Review Council to ensure all sources, statistics, and claims meet the highest standard for accurate and unbiased advice.Learn more about oureditorial review process.

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If you're one of them, you might be wondering whether or not you can claim those car insurance payments as a tax deduction this tax season. The answer is possibly — it really depends on how you use your car. Here’s how to tell if your car insurance payments can be claimed as a tax deduction.

Key takeaways

  • Whether or not you can deduct your car insurance depends on the details of your employment.

  • People who are self-employed or freelancers may be able to deduct at least some of their car insurance premiums as a tax deduction.

  • Your normal commute doesn't count as a business expense. 

  • But if you have to drive as part of your job and don’t already get reimbursed by your employer, you may be able to deduct at least some of your car insurance expenses.

What is a tax deduction?

A tax deduction is an amount of money you subtract from your yearly taxable income when you file your taxes. But not everything can qualify for a deduction — there’s a wide variety of expenses that can be claimed as tax deductions, but when it comes to car insurance, claiming even part of your premiums as a deduction can be tricky.

When is your car insurance tax deductible?

Your car insurance may be tax deductible if you use your car for work, like making deliveries in your personal vehicle, or traveling to meet clients. But remember that commuting to and from work doesn't count as a business expense.

Is car insurance tax deductible if you’re self-employed or a freelancer?

If you work for yourself and you use your car for your business or work, it’s likely that you’ll be able to claim at least some of your car insurance premiums as a tax deduction. And that’s not all — in addition to car insurance, there are other vehicle expenses you might be able to deduct as well, assuming you use your car for your work. Other expenses you may be able to deduct include spending on:

If you’re a W2 employee in a handful of qualifying roles — like an Armed Forces reservist or a qualified performing artist — and you use your personal vehicle for any work-related purposes, or if you have to drive for work and don’t already get reimbursed by your employer, you may be able to deduct at least some of your premiums.

Work-related uses for your personal car might include any extra trips to pick up supplies or attend meetings, or driving to visit clients or participate in a work-related event, like a conference. You can claim many of the same auto-related expenses as car-owners who are self-employed, including car insurance costs, provided you document how and when you used your car for business purposes.

But if you got a speeding ticket while rushing to a work function, that’s a no-go, traffic ticket fines are never tax deductible.

Is car insurance tax deductible if your car is for personal use only?

If your car is mostly for personal use, you usually can’t deduct your car insurance premiums from your taxable income. That means that, even if you drive to and from work, if your car stays parked all day while you’re working, your car insurance isn’t tax deductible.

Have the tax laws changed this year?

Tax laws change every year, sometimes significantly so, which means what you did when you filed your taxes last year might not be appropriate this year. Make sure to review the tax laws carefully or work with a professional accountant to make sure you are following the law when it comes to claiming your car insurance expenses.

Preparing for tax season

Just remember the golden rule of getting ready for tax season — keep great records. Consult a tax professional if you have specific questions about deducting your car insurance or other auto-related expenses from your taxable income.

Saving money on your car insurance

Claiming a portion of your car insurance costs on your taxes is one way to save money, but there are other ways to save money on your car insurance that are more effective — and don't complicate your taxes.

  • Compare quotes: Car insurance rates vary by company, which means the same driver could save hundreds of dollars or more by comparing quotes between multiple insurance companies.

  • Take advantage of discounts: Insurance companies offer a variety of discounts, including bundling discounts, employer discounts, good student discounts, safe driver discounts, and more, so make sure you’re getting the savings you deserve.

  • Keep your driving record clean: Avoiding accidents and moving violations is the best way to keep your car insurance costs low. If you already have an accident or claim on your record, staying safe on the road and avoiding future mistakes will help your rates go back to normal faster.

Author

Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Editor

Anna Swartz is a senior managing editor and auto insurance expert at Policygenius, where she oversees our car insurance coverage. Previously, she was a senior staff writer at Mic.com, as well as an associate writer at The Dodo.

Expert reviewer

Amy Northard, CPA, is a certified public accountant and a member of the Financial Review Council at Policygenius. Previously, she served as a certification administrator for the National Association of Mutual Insurance Companies (NAMIC).

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