Owning a vehicle isn’t just a convenience. For millions of people, it’s a necessity. Between commuting to work, attending healthcare appointments, and running personal errands, you probably rely on your vehicle for a variety of purposes. However, gas, insurance, and maintenance can easily turn that necessity into a major expense.

Many people don’t realize just how many car tax deductions are available to them. Contrary to what you may have assumed, you don’t have to use your car only for business to be eligible to claim some, or all, of these personal car write-offs.

Discover more about eight write-offs that might be available to you so you can save some money on your yearly tax bill.

Mileage Deductions for Mixed-Use Vehicles

If you use your car for personal and business purposes, you may be allowed to deduct a portion of your mileage based on the percentage of business use. The IRS allows taxpayers to choose between the standard mileage rate and the actual expenses method.

For 2025, the standard mileage rate is 70 cents per mile, up three cents from last year. This means if you drove 5,000 miles for business in the last year, you can claim $3,350. The actual expense method is a bit more complex, as it requires you to count every car-related cost and deduct the percentage that reflects your business use.

Take note, you can’t switch methods every year, so you want to be careful about which method you choose.

Car Loan Interest

If you’re self-employed, you know the importance of doing everything that you can legally do to lower your tax bill. You might be eligible to deduct a portion of your car loan interest. The key to this deduction is how much your vehicle usage is tied to work.

Assume that 60% of your vehicle usage involves work. If you spent $2,000 on your auto loan’s interest, you can deduct 60% of that interest, or $1,200 on your taxes.

Unfortunately, W-2 employees are not eligible for this deduction, even if they use their personal vehicle for work. However, that rule could change after the 2025 tax year.

Depreciation on Your Vehicle

Business owners who use their vehicle for work can claim depreciation, which can often be one of the biggest deductions available. The IRS allows you to claim depreciation over a five-year period for most vehicles, depending on how much of your vehicle use is for business.

For example, if you buy a $35,000 car and use it 70% for business, you can claim depreciation on $24,500 of its value. The actual deduction depends on IRS depreciation limits and whether you use Section 179 vehicle depreciation strategies.

The IRS has annual caps on how much depreciation you can claim, especially for passenger vehicles. However, for vehicles weighing more than 6,000 pounds, you may qualify for bigger deductions under bonus depreciation rules.

Gas and Maintenance Costs

Using the actual expenses method also opens the door to deducting a portion of your gas and maintenance costs. However, this is another deduction that only applies to the business-use portion of your vehicle. If 40% of your vehicle usage is for business, you can claim 40% of your gas, oil changes, general repairs, tire changes, and other maintenance costs.

To claim these deductions, you’ll need to keep very detailed records of your annual vehicle expenses in addition to records about when you used your vehicle for work.

The more you document, the more you’ll be able to deduct. You’ll also want to keep in mind that if you use the standard mileage rate, you can’t use this deduction, too. The amount that you spend on gas is already included in that deduction.

Vehicle Registration Fees and Taxes

Depending on your state, you may also have to pay annual vehicle registration fees, as well as property taxes based on your vehicle’s value. In most cases, these additional fees are completely deductible on your federal income taxes.

If the fee is value-based, like it is in California, the IRS allows you to deduct that portion as a personal property tax on your federal tax return. This deduction is available, even if you don’t itemize your tax deductions.

For business use, the value-based portion may be deducted as a business expense instead of a personal one. When claiming this deduction as a business expense, you must prorate the amount based on how much you use the vehicle for business purposes.

Insurance Premiums

For self-employed taxpayers who use their vehicle for business purposes, a portion of their auto insurance premiums may be tax-deductible. Much like other actual expenses, you’ll need to calculate the business-use percentage of your vehicle and apply that to your premium payments.

Even if you’re not self-employed, you may be eligible to take advantage of this deduction. If you use your vehicle for a qualified gig, such as food delivery or ridesharing, you can still claim a portion of your annual insurance premiums. However, to be eligible for this deduction, your car insurance policy must also cover business use.

Be careful when it comes to this deduction, as using your personal auto insurance for business activities without disclosure could void your insurance policy. Be sure that you discuss your insurance policy with a representative from your insurance provider to determine what path is best for you.

Parking Fees and Tolls

One of the most overlooked deductions is for parking fees and tolls incurred while using your vehicle for business purposes. One of the most appealing aspects of this deduction is that you can use it no matter which mileage deduction method you use. As long as parking fees and tolls are related directly to business use, you can claim them on your taxes.

If you attend a business conference and pay $25 for parking and $10 in tolls, you can deduct $35 on your tax return. However, you cannot claim any parking fees or toll charges associated with personal errands or commuting to your primary workplace.

This is especially good news for freelancers and gig workers, who are making up a bigger portion of the economy. These seemingly small amounts can add up quickly over the course of a year, offering you a potentially sizeable deduction.

Business Use of a Home Garage

Our last deduction doesn’t relate to the vehicle itself, but it’s still good news for self-employed taxpayers who regularly use their garage for business purposes. For instance, if you’re a general contractor who stores tools and materials in your garage, the related portion of your home expenses may be tax-deductible.

To be eligible, you do need to meet the IRS requirements for a home office deduction, and the garage must be used exclusively for business. This deduction could allow you to write off a portion of your rent, mortgage interest, utilities, and insurance on your taxes.

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