Can a car loan be tax deductible?

We recently expanded our mobile car maintenance business by buying a new truck. Can you deduct a vehicle’s loan from your taxes?

Answer
Congratulations on the success of your business! In terms of the loan, I have more good news for you. Since the vehicle is driven for business use, your car loan is tax deductible.
Now, the one thing to keep in mind is that the amount you can deduct is based on how much the vehicle is used for business versus personal purposes. Personal use is not deductible. So, you must keep careful records of the percentage of time the car is driven for each purpose.
Come tax time, you may deduct the percentage of your car loan’s interest associated with the percentage of time you drive the vehicle for business use. You may also deduct business-related car expenses, so long as you retain proof of each expense (such as a receipt).
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Will Baldwin
Answered on Dec 02, 2021
Will Baldwin is a graduate of Ryerson’s School of Journalism with three years of experience writing and freelancing for multiple publications including The Globe and Mail. With a deep interest in geography, economics, and politics, he has come to be extremely interested in the relationship of personal finances and culture with the auto industry as one of the forefronts of his interest. When not writing, he’s an avid sports fan who splits his time between watching too much basketball and having his heartbroken by the New Orleans Saints. Will is based in Toronto, Ontario.
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