Is your insurance tax-deductible? Here are 4 situations where it could be

Insurance has become a high cost for many Americans. And unlike other expenses, these aren’t amounts most people can write off on their taxes.

However, if you’re self-employed or have rental income, your situation may differ, said Hannah Cole, an enrolled agent and founder of small-business tax consulting firm Sunlight Tax in Asheville, North Carolina. After all, insurance can help protect your business.

She added that eligible expenses vary by your business’s unique needs. “The IRS deduction rules for businesses say it has to be ordinary and necessary,” she said, noting that this can include a wide variety of expenses, from operating costs needed to keep your business running to voluntary ones that would help your business grow.

While this means you may need to make some changes to your tax filing, it also allows you to deduct business-related expenses from your income, including some or all of your insurance premiums.

Here are some common scenarios and what insurance is tax-deductible.

However, there are two ways to claim this deduction: one is based on collecting all expenses, and the other focuses on mileage.

With the receipts method, you track all costs you incur for your car for the year, along with your personal and business-use mileage. Then, you use both figures to determine what percentage of your expenses were deductible for your business. That amount would be deductible. For example, if you use your car for personal reasons 75% of the time and use it to drive for Uber 25%, you’ll deduct a quarter of your car-related expenses on your taxes.

The mileage method simplifies things a bit. “It doesn’t require receipts, but it does require a mileage log,” Cole said. Then, you multiply the number of miles you drove during the year for your business by the standard mileage rate, a figure that is set annually by the IRS.

For the 2025 tax year, the standard mileage rate is $0.70 per mile. While that might not seem like a lot, it adds up. “That mileage rate is so generous that, in my experience as a tax practitioner, most clients of mine do better taking the mileage rate than the actual expense record,” Cole said.

But, you’re not locked into one method. “You’re free to track it both ways and see what’s bigger,” Cole said. “Over time, if you realize one method always amounts to a huge deduction and the other does not, then you can let go of the other one.”

You need to keep records no matter which path you choose, and you’ll only be able to deduct the expenses related to your business if you use it for business and personal driving. The best way to get a handle on this is to keep careful records. “Get a mileage tracking app that makes this process easy,” Cole said.

Landlord insurance costs are typically about 25% higher than homeowners insurance costs, according to the Insurance Information Institute.

However, unlike a standard homeowners policy, these expenses can be deducted from your income. “As a landlord, you’re essentially still running a business, and so it’s still that same idea of ordinary and necessary,” Cole said.

If you have a mortgage on the property, landlord insurance is a requirement. And, even if your property was bought with cash, landlord insurance is protects your assets.

This type of insurance includes liability coverage, which can shield you if you’re found at fault for damages to someone else. It also pays to repair or replace your property’s structure if it’s damaged in a covered event like a fire, as well as loss of rent.

Since it’s an expense that’s dedicated to your business, landlord insurance is deductible. You may also be able to deduct expenses related to other necessary insurance policies, like flood insurance or earthquake insurance.

Additionally, if you use a car or truck to maintain your properties, you may also deduct expenses related to that use. You can either track the actual expenses of owning your car—including car insurance, maintenance, and gas—to deduct a portion of business-related miles relative to the miles you drove in total. Or, you can track the miles driven for your rental property and use the standard mileage rate method.

If you’re a freelancer, you can deduct a variety of insurance expenses related to your work.

If you use your car for your business, you can deduct a portion of your auto expenses related to how much you drove throughout the year for work. You could also take the standard mileage rate deduction, provided you keep a mileage log.

If you have a home office, you may be able to deduct a portion of your renters or homeowners insurance. “To qualify, you have to have a dedicated space that is used regularly and exclusively to do work,” Cole said.

To take this deduction, you’d need to calculate the square footage of the space you use just for work. Then, divide that number by the total square footage of your home to find a ratio. “If your home office is 15% of the square footage of your entire apartment, then that means 15% of your overall expenses of the house are now deductible,” Cole said. “That includes your rent, your renters insurance, your homeowners or flood insurance.”

Lastly, any liability insurance you get for your business can be deducted. Policies like professional liability insurance can protect your business from legal claims surrounding copyright violations, errors and mistakes, and would be a deductible expense.

If you own a small business, your insurance costs can be hefty. From commercial property insurance for your storefront to commercial auto insurance for a delivery vehicle, you might need a few separate policies for many aspects of your business.

However, many of these expenses are deductible.

A business owner’s policy, which can cover business property, liability and interruptions, would be a qualifying expense.

If your business is run out of your home, you may also be able to claim the home office deduction. That could make a portion of your home expenses, including insurance, a deductible expense. And, like any other business owner, auto expenses may also be deductible if you drive for your business.

At CNBC Select, we work with experts with specialized knowledge and authority. For this story, we interviewed Hannah Cole, an enrolled agent and tax expert at Sunlight Tax. Cole is based in Asheville, North Carolina and is the author of Taxes For Humans: Simplify Your Taxes And Change The World When You’re Self-Employed.

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