Which Auto‑Insurance Costs Are Tax‑Deductible for 2018

Deductible Auto‑Insurance Expenses in 2018

If you use a vehicle for business, the portion of your auto‑insurance premium that covers that business use is tax‑deductible on your 2018 return. Personal commuting costs remain nondeductible, while premiums for commercial vehicles, trucks used for freight, or rideshare drivers can be written off proportionally.

How to Determine the Deductible Amount

First, calculate the percentage of miles driven for business versus total miles. Multiply that percentage by your total auto‑insurance premium to arrive at the deductible amount. Keep a mileage log or use a reliable tracking app to substantiate the split.

Specific Policy Types That Qualify

Only the insurance that protects you while performing business activities qualifies. This includes:

• Liability coverage for a commercial vehicle
• Comprehensive and collision coverage on a vehicle used for work
• Physical‑damage insurance for a delivery truck or rideshare‑service car

Personal liability or personal‑use coverage does not qualify.

Business Use of a Personal Vehicle

When you drive your personal car for business, you may either deduct the actual expenses (including the business‑use portion of insurance) or use the standard mileage rate. For 2018, the standard mileage rate was 54.5 cents per mile, which already incorporates an insurance component, so you cannot claim both the mileage rate and the insurance expense for the same miles.

Reporting on Your Tax Return

Report the deductible portion on Schedule C (Form 1040) if you are self‑employed, or on Form 2106 for employees who receive a reimbursement. Attach a statement showing the mileage calculation and the insurance premium breakdown.

Key Points at a Glance