02/11/2025
✅ What You CAN Deduct for vehicles expenses if you are self-employed:
Interest on the loan – If you are self-employed, the interest portion of your car loan is deductible as a business expense. (If you’re an employee, it’s not deductible.)
Depreciation – You can deduct the depreciation of the vehicle over time, based on its business use percentage.
Operating Costs – Gas, maintenance, insurance, registration, and repairs are all deductible based on business use.
❌ What You CANNOT Deduct:
The principal portion of the loan (this is considered paying off an asset, which is not an expense).
Example Calculation:
Let’s say:
Loan payment = $500/month ($6,000/year)
Interest portion = $1,000/year
Business use = 80%
Your deductible interest: $1,000 × 80% = $800
Other deductible expenses (gas, repairs, insurance, etc.) would also be factored in.
If you use the mileage deduction method, you can deduct business miles driven at the IRS standard mileage rate, which for 2024 is $0.67 per mile.
What’s Included in the Mileage Rate?
The standard mileage rate already accounts for:
✅ Gas
✅ Oil changes
✅ Maintenance & repairs
✅ Insurance
✅ Registration & licensing fees
✅ Depreciation
This means you cannot deduct these expenses separately if you use the mileage method.
What CAN You Deduct in Addition to Mileage?
Even if you choose the mileage method, you can still deduct:
✔️ Toll fees (for business trips)
✔️ Parking fees (for business-related stops, NOT tickets)
✔️ Interest on a car loan (if self-employed)
Example Calculation:
If you drove 15,000 miles for business in 2024:
15,000 miles × $0.67 = $10,050 deduction
Call us for an appointment if your self-employed or a small business owner! We would love to help you make sure you are deducting everything you are allowed to!!
