Apply the strategies in this guide to reduce your tax burden and keep your business financially optimized. Well-organized records help you pass audits and claim deductions without stress. Always attach statements and receipts that show the interest charged and its business purpose. A CPA or tax preparer can help determine where and how to enter the expense properly. Using a personal card for business can still qualify, but documentation must be meticulous.
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Erica Sandberg is a credit and money management expert who began her career at Consumer Credit Counseling Service (CCCS). There, she helped individuals and families overcome their debt issues and developed budgets, then transitioned into the agency’s primary media spokesperson. Credit card interest is never deductible for individuals, but it’s a different story when a business is involved. For business tax planning articles, our tax resources provides valuable insights into how you can reduce your tax liability now, and in the future. If your business is subject to interest deduction limitations, you may be able to carry excess interest forward to future tax years.
How do I deduct credit card interest for business expenses?
Any interest charged on the credit card for these expenses is also deductible. Maximizing your credit card deductions is just one of many ways to optimize your business taxes. Consider working with a tax professional to ensure you’re getting the most out of your deductions and not missing out on any opportunities. Credit card interest deductions are a valuable but often overlooked way to reduce your business’s tax liability.
- Regarding the matters discussed in this post, each individual should consult his or her own attorney, business advisor, or tax advisor.
- In 2025, business credit card interest remains tax deductible when used for ordinary and necessary business purposes under IRS guidelines.
- If you use your card solely for business, you’re likely eligible to deduct 100% of the interest.
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Credit card interest as business expense
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However, the deduction is limited to your net investment income and requires filing Form 4952. In some cases, you can have your cash back deposited in a bank account or sent to you as a check. We’ll use the last four digits of your Social Security number to get your approval odds. Please try adjusting your filter settings to see more credit card options.
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Credit card interest is the fee charged when you carry a balance from one month to the next. In 2025, the average credit card interest rate is hovering around 20%, reflecting the recent rate hikes by the Federal Reserve. The transaction shows up on your credit card statement, and you repay the bank for the purchase. Previously, he was a homepage editor and digital content producer for Fox Sports, and before that a front page editor for Yahoo. He has decades of experience in digital and print media, including stints as a copy desk chief, a wire editor and a metro editor for the McClatchy newspaper chain. Finder research shows the average Australian with a credit card could save $222 over 32 months by switching cards.
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While personal credit card interest isn’t deductible, different rules apply to business expenses. Understanding these distinctions can potentially save your company significant money at tax time. Additionally, if you have a business credit card, the interest on that card is typically deductible as well. Just ensure that you’re using it solely for business-related purchases to avoid complications during tax season. Corporate credit cards are typically offered to larger or more established businesses with significant annual expenses.
To qualify for a deduction, the credit card interest must be incurred for business-related expenses. Personal expenses charged to a business credit card are not tax deductible. Navigating the tax landscape for business credit card interest deductions. If you’re using a mixed-use card (i.e., one used for both personal and business expenses), only the interest on the business portion is deductible. In 2025, business credit card interest remains tax deductible when used for ordinary and necessary business purposes under IRS guidelines. A tax deduction reduces your taxable income, which means you pay less in taxes overall.
- Only the portion of interest attributable to business expenses is deductible.
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- Although many of these cards can be good for transferring a balance, you should look at our best cards for balance transfers to get a more detailed look at the options to reduce your current card debt.
With tools like CardMatch™ and in-depth advice from our editors, we present you with digestible information so you can make informed financial decisions. The Capital One Spark Miles for Business has a straightforward earning rate of 2 miles per dollar on every purchase – ideal for businesses who don’t spend heavily in one particular category. Better, your miles are incredibly flexible; redeem for travel related purchases or transfer them to one of Capital One’s 15+ travel partner programs.
There are also features that help manage cash flow, such as Pay Over Time. The card’s annual travel credit, anniversary bonus miles, and comprehensive airport lounge access make it well worth the annual fee. To get access to these travel perks, you’ll usually have to spend around $200 more in annual fees. Jeanine Skowronski is a credit card expert, analyst, and multimedia journalist with over 10 years of experience covering business and personal finance. She has previously is interest on a business credit card deductible served as the Head of Content at Policygenius, Executive Editor of Credit.com, Deputy Editor at American Banker, Staff Reporter at TheStreet and a columnist for Inc. To calculate the business portion, determine the percentage of your credit card use that is for business purposes.