Car Loan Tax Claim? Discover Savings Fast (2026)

Are you wondering if you can claim your car loan on tax? If you're among the countless Australians hoping to maximise your tax return, understanding the tax implications of your car loan is crucial. Whether you use your car for business or personal purposes, knowing what you can and cannot claim can make a significant difference to your finances. Here's everything you need to know about claiming your car loan on tax in 2026.

Understanding Car Loan Tax Deductions

The first step in determining whether you can claim your car loan on tax is understanding the basic principles of tax deductions related to car expenses. In Australia, the primary consideration is the purpose for which the vehicle is used. If your car is used for business purposes, you may be eligible to claim certain expenses, including interest on your car loan, as tax deductions. However, if your vehicle is solely for personal use, claiming these expenses is not an option.

Tax Deductions for Car Loans: Rates, Requirements, and Options

Let's delve into the specifics of what you can claim and under what circumstances:

• Interest on Car Loan: If your car is used for business purposes, you can claim a deduction on the interest paid on your car loan. As of 2026, the interest rates on car loans typically range from 6.49% to 12%, depending on your credit score and the lender.
• Depreciation: The depreciation of your car is also tax-deductible if the vehicle is used for business. The Australian Taxation Office (ATO) allows you to claim a portion of the car's depreciation each year.
• Running Costs: Additional expenses such as fuel, maintenance, and insurance can also be claimed if the car is used for business purposes.

Note that the extent to which you can claim these expenses depends on the percentage of time the vehicle is used for business purposes. For example, if you use your car 70% of the time for business, you can claim 70% of the car expenses.

Steps to Claim Your Car Loan on Tax

Here's a step-by-step guide to help you claim your car loan on your tax return:

1. Determine Business Use Percentage: Keep a logbook for at least 12 weeks to calculate the percentage of business use. This will help you determine how much of your expenses are claimable.
2. Calculate Deductible Expenses: Use the logbook percentage to calculate the deductible portion of your interest, depreciation, and running costs.
3. Keep Detailed Records: Maintain records of all car-related expenses, including loan statements, receipts for fuel, maintenance, and insurance.
4. Consult with a Tax Professional: Consider consulting with a tax professional or financial advisor to ensure you're claiming the correct amount. Esteb and Co, with access to 83+ lenders, can provide valuable insights into managing your car loan effectively.
5. File Your Tax Return: Use the calculated amounts to complete your tax return, ensuring all deductions are accurately reported.

Tips and Considerations

• Stay Informed: Tax laws and regulations can change. Stay updated with the latest information from the ATO to ensure compliance.
• Use Technology: Consider using apps to track your mileage and expenses. This can simplify the process and provide accurate records.
• Review Loan Terms: If you're considering refinancing or taking a new car loan, compare interest rates and terms from multiple lenders. Esteb and Co's panel of 83+ lenders can help you find competitive rates.
• Understand Depreciation Methods: Familiarise yourself with different depreciation methods, such as the diminishing value and prime cost methods, to choose the most beneficial for your situation.

Frequently Asked Questions

• Can I claim interest on my car loan if I use my car for personal purposes only?
  No, interest on a car loan is only claimable if the vehicle is used for business purposes.
• What percentage of my car expenses can I claim?
  The percentage you can claim depends on the proportion of business use, as determined by your logbook records.
• Is it mandatory to keep a logbook?
  While not mandatory, a logbook is the most accurate method to determine business use percentage and is often required by the ATO.
• Can I claim a car loan if I'm self-employed?
  Yes, self-employed individuals can claim car loan interest if the vehicle is used for business purposes.
• How long should I keep records of my car expenses?
  The ATO recommends keeping records for at least five years in case of an audit.
• Are there any changes to car loan tax deductions in 2026?
  As of now, there are no significant changes, but it's always wise to check for any updates annually.
• Can I claim GST on car expenses?
  If you're registered for GST and the car is used for business, you may be able to claim GST credits on car expenses.