Interest Expenses

Interest paid on business loans are tax deductible. They can be fully deducted for the year they were incurred even if the asset for which the loan is taken is depreciated. Examples of tax deductible interest are:

• Business credit card interest.

• Personal credit card interest when used for a sole proprietorship / single-member llc and purchases are used for business. If the credit card was used both for business and personal needs, proportional deduction may be used. For example, $1,000 was spent on a personal credit card. $400 to buy supplies for office and $600 for personal needs. During taxable year $200 interest was assessed on the credit card. 400 / 1,000 x 200 = $80. $80 can be deducted as a business expense.

• Auto Loan interest. This is true even if standard mileage is used for the vehicle.

• Equipment loan interest.

• Other loan interest.