What Percentage of Car Repairs Are Tax Deductible?

Car repairs, like many vehicle expenses, can sometimes be tax deductible, but this is rarely a straightforward matter. The deductibility hinges primarily on how the vehicle is used, with personal use generally not qualifying for tax benefits. Tax deductions for car repairs are available when the vehicle serves a business purpose. Understanding the specific rules and requirements is essential for claiming these deductions.

Understanding Deductibility Principles

Tax law distinguishes between personal and business expenses. Personal expenses, including vehicle maintenance for personal transport, are not deductible. Routine car repairs for a personal vehicle, such as oil changes or tire replacements, do not offer tax savings.

Business expenses are deductible if they are “ordinary and necessary” for conducting a trade or business. An ordinary expense is common and accepted in a particular business or industry, while a necessary expense is helpful and appropriate for that business. Car repairs meet these criteria if the vehicle is used for business activities. If a vehicle is used for both business and personal purposes, only the portion of expenses attributable to business use is deductible. This allocation is key to the “percentage” aspect of car repair deductibility.

When Car Repairs Become Deductible

Car repairs are deductible when the vehicle is integral to earning income. The percentage of deductibility directly corresponds to the percentage of the vehicle’s business use. There is no universal fixed percentage; it depends on how much the vehicle is utilized for qualified business activities.

Self-employed individuals, including freelancers, small business owners, and gig workers like rideshare or delivery drivers, can deduct car repairs as a business expense. These expenses are reported on Schedule C, Profit or Loss from Business. If a vehicle is used for both business and personal travel, only the business portion of the repair costs is deductible; for instance, if a vehicle is used 60% for business, 60% of the qualified repair costs can be deducted. This calculation is typically done using the actual expense method, which allows for the deduction of specific costs like repairs, gas, oil, insurance, and depreciation. The alternative, the standard mileage rate, offers a simplified deduction based on miles driven and generally does not allow for separate deductions of actual repair costs, though parking fees and tolls can still be added.

For employees, the ability to deduct unreimbursed car repairs is significantly limited due to the Tax Cuts and Jobs Act (TCJA) of 2017. This legislation suspended miscellaneous itemized deductions, including unreimbursed employee expenses, from 2018 through 2025. Consequently, most employees can no longer deduct car repairs, even if they use their personal vehicle for work and are not reimbursed by their employer. Very limited exceptions exist for certain groups, such as qualified performing artists, Armed Forces reservists traveling over 100 miles from home, and fee-basis state or local government officials.

Rental property owners can also deduct car repairs for vehicles used to manage their rental properties. This includes travel to show properties, collect rent, or perform maintenance. Similar to other business uses, the deduction is based on the percentage of the vehicle’s use for rental activities. Both the standard mileage rate and the actual expense method are available for landlords, with actual expenses often providing a larger deduction if significant costs were incurred.

Documenting Your Car Repair Deductions

Accurate and comprehensive record-keeping is essential for substantiating car repair deductions. The Internal Revenue Service (IRS) requires detailed documentation to support any claimed business vehicle expenses. Without proper records, deductions may be disallowed during an audit.

You must retain invoices and receipts for all car repairs. These documents should clearly show the date of service, the amount paid, the vendor’s name, and a description of the services performed. This financial record confirms the expense incurred.

Maintaining a detailed mileage log is also essential, especially for vehicles used for both business and personal purposes. This log should include the date of each trip, the destination, the business purpose, and the mileage for that specific trip. Record the vehicle’s total mileage for the year, including odometer readings at the beginning and end of the tax period. This enables the calculation of the precise business-use percentage, which is critical for determining the deductible portion of repair costs under the actual expense method. Digital record-keeping solutions, such as mileage tracking apps, can simplify this process by automatically logging trips and generating reports.