Created by Lucas Luís at Wednesday, 9 April 2025

Car maintenance and repair in the IRS: what can be deducted?

Declaring expenses on your personal tax return can be a smart way to reduce your tax bill. But when it comes to cars, not all expenses are accepted by the tax authorities. Among them is car maintenance and repair, a subject that raises many doubts. After all, what are the criteria for these expenses to be deductible in the IRS?

Car expenses: when can they be deducted?

In order for car costs to be accepted as a deduction in the IRS, it is essential that the cars are used for a professional or business activity. This means that they must be used in the exercise of the activity and duly registered as assets of the company or sole proprietor.

If the vehicle is used exclusively for personal purposes, the costs of maintenance, tyres, parts or workshop repairs are not tax deductible.

In other words, if you are not self-employed (as a freelancer or sole proprietor with organised accounts) and the car is not directly related to that activity, you cannot deduct any costs with the car in your IRS. This includes fuel, maintenance and repairs, insurance, IUC, tolls and car parks

Even if you use your car to commute to work, this is not considered enough to make it deductible. The IRS, in this case, considers these expenses to be personal costs, which have no impact on determining taxable income.

Car maintenance and repairs: what is accepted?

When we talk about car-related IRS deductions, expenses such as:

Periodic servicing at garages;
Replacing tyres;
Changing oil, filters and other consumables;
Mechanical and electrical repairs;
Replacement of parts due to wear and tear or breakdown;
Diagnostic services.

These car expenses can only be considered tax deductible if they are directly linked to professional activity and are correctly documented.

The importance of the invoice with TIN

Without a valid invoice, there is no deduction. All car maintenance and repair costs must be accompanied by full invoices, with the tax number, a detailed description of the service and the itemised value. It is also advisable to keep these documents for at least four years.

Can IVA be deducted?

IVA on expenditure on passenger cars is only deductible at 50 per cent, even when the cars are used for business purposes. In the case of goods vehicles, instructional vehicles or hire cars, VAT can be deducted in full.

When it comes to car maintenance and repair, this rule applies to all services provided by garages, provided they fulfil the legal criteria.

Simplified or organised accounting?

Those on the simplified personal income tax regime cannot directly deduct car expenses. In these cases, taxable income is calculated based on fixed coefficients. On the other hand, those who opt for organised accounting can include car maintenance and repair expenses as business costs, as long as they are duly covered and documented.

Mistakes to avoid with car deductions

Even so, there are mistakes to avoid in car deductions:

Declaring expenses for cars used also for personal purposes;
Submitting invoices with generic descriptions;
Including repairs that are unrelated to your professional activity;
Forgetting to register the car as a company or business asset.

These errors can lead to deductions being rejected in the IRS or even fines in the event of a tax inspection.

Expenditure on car maintenance and repair can be deducted from your personal income tax (IRS), but only in specific contexts. The car must be clearly linked to professional activity and all expenses must be well documented. With good management and attention to detail, you can optimise your car expenses and reduce your tax bill.

Keeping everything organised and following the IRS rules can make all the difference at the end of the year. And when it comes to cars, every kilometre counts - also for your finances.