Business Loan Interest Is Tax Deductible on Schedule C Line 16
Schedule C is the tax form you fill out for your business. Interest on money you borrowed for your business goes on line 16. A mortgage on a business building goes on 16a. A car or truck loan goes on 16b. Other loans and credit cards go on 16c. You write off only the interest part of each payment.
What goes on lines 16a, 16b, and 16c, "Interest"
- Mortgage interest on a building your business uses, on line 16a. Your bank sends a yearly Form 1098 that shows it.
- The business share of interest on your car or truck loan, on line 16b
- Interest on a bank loan for your business, on line 16c
- Interest on a business line of credit, on line 16c
- Interest on a credit card you used for business purchases, on line 16c
What goes on a different line
- Interest on your home mortgage Schedule A, your personal write-offs page
- The personal share of your car loan interest Ask your tax preparer about Schedule 1-A
- A car or truck lease payment Line 20a, Rent or lease
- Interest on a personal loan or personal card purchases Not on Schedule C
What you can't write off
- The part of a loan payment that pays back the loan
Updated by Doug, owner of Shoeboxed. Rules from the IRS Schedule C instructions.
Costs that go on a different line
Interest on your home mortgage goes on Schedule A
Mortgage interest on the home you live in is personal. It goes on Schedule A, the page for personal write-offs, if you itemize. Itemizing means you list your write-offs there instead of taking the standard deduction, the flat amount most people take. Line 16a is for a mortgage on a building your business uses, like a shop you own.
The personal share of your car loan interest may go on Schedule 1-A
If you use one car for work and for personal driving, split the loan interest. The business share goes on line 16b. The personal share may go on Schedule 1-A, another page of your tax return, for some car loans. Your tax preparer can tell you if yours counts. You can't write off the same interest on line 16b and on Schedule 1-A.
A car or truck lease payment goes on line 20a
If you lease your truck instead of buying it, the payment is rent, not loan interest. The business share goes on line 20a, "Rent or lease, vehicles, machinery, and equipment." If you use the IRS rate per mile for that truck, the rate covers the lease. See where rent goes on Schedule C.
The part of a loan payment that pays back the loan is not a write-off
A loan payment has two parts, the interest and the money that pays back the loan. Line 16 is for the interest. Your lender's yearly statement shows how much of the year's payments was interest. For a mortgage, that statement is a Form 1098.
Interest on money you spent on personal things stays off Schedule C
The IRS says interest on a personal loan stays off Schedule C. The IRS goes by what you spent the money on. If you spent part of a loan on your business and part on yourself, split the interest the same way. Do the same for a credit card you use for both.
New for 2026, the business share of car loan interest goes on line 16b
The 2026 Schedule C has a new line 16b, "Interest, vehicle loan." Put the business share of the interest on your car or truck loan there. If you drive the car 60% for your business, 60% of the year's interest goes on line 16b.
You can write off this interest even if you use the IRS rate per mile for your car. The rate per mile covers a lease payment, but not loan interest. The IRS gives this example. You paid $600 in car loan interest and drove the car 60% for business, so you write off $360.
The personal share may go on Schedule 1-A, another page of your tax return. Your tax preparer can tell you if yours counts. The IRS says you can't write off the same interest on line 16b and on Schedule 1-A. Our IRS mileage rate calculator shows what your business miles are worth.
How to tell business interest from personal interest
The IRS looks at what you spent the borrowed money on. Interest is business interest when you spent the money on your business.
- Interest on a bank loan you used to buy a mower for your lawn business is business interest.
- Interest on business purchases on your credit card is business interest.
- Interest on a credit card for a family vacation is personal, and it stays off Schedule C.
Where 5 common interest payments go on Schedule C
Say you run a landscaping business. Here is the interest you paid in 2026. The amounts are an example.
| What you paid in 2026 | Cost | Where it goes on Schedule C |
|---|---|---|
| Interest on a bank loan for a new mower | $1,400 | Line 16c, Interest, other |
| Interest on your business credit card | $300 | Line 16c, Interest, other |
| Interest on your truck loan, with the truck used 80% for work | $900 | Line 16b gets $720 |
| Interest on your home mortgage | $6,000 | Schedule A, your personal write-offs page |
| The rest of your truck payments, which paid back the loan | $4,800 | Not a write-off |
Line 16c gets $1,700 for the bank loan and the card. Line 16b gets $720, which is 80% of the truck loan interest. The home mortgage interest and the rest of the truck payments stay off Schedule C.
Write off only the interest part of each car loan payment
77 Shoeboxed customers had receipts from a car or truck lender, like Ally or Ford Credit, from November 2025 to October 2026. A typical receipt came to $591, the whole payment, not just the interest. Some of these receipts are lease payments, not loan payments, and a lease payment goes on line 20a.
For a loan, part of each payment pays back the loan, and only the interest is a write-off. Put the business share of the interest on line 16b. Your lender's yearly statement shows the interest for the year, so save it with your receipts.
Shoeboxed car lender receipts, November 2025 to October 2026
512
car lender receipts
77
Shoeboxed customers who saved them
$591
for a typical receipt. Half cost more, and half cost less.
Shoeboxed counted the receipts customers uploaded from November 1, 2025, to October 31, 2026, from car and truck lenders, like Ally, GM Financial, Ford Credit, and Toyota Financial Services. We matched each lender by the name on the receipt, in any Shoeboxed category. Some receipts showed no total, so the dollar amounts leave those out.
Keep each loan statement for 3 years after you file
The IRS wants a record of each write-off, and in most cases you keep it for 3 years after you file. For interest, keep the lender's yearly statement, which shows the interest you paid. If you split a car loan between work and personal driving, keep a mileage log too.
Snap paper statements with the Shoeboxed app, and forward the ones that come by email. The Shoeboxed app also tracks your business miles and saves a mileage receipt for each trip. We keep everything for as long as you have an account.
Every Shoeboxed plan comes with a 30-day, 100% money-back guarantee. See the plans.
6 common questions about business loan interest on Schedule C
Yes. Interest on a business loan goes on Schedule C line 16. A mortgage on a building your business uses goes on line 16a, the business share of a car or truck loan on line 16b, and other business loans and card interest on line 16c. You write off the interest only. Interest on personal loans stays off Schedule C.
Keep every receipt for your business in one place with Shoeboxed
Snap them with the app, forward the ones that come by email, or mail the paper ones to us in a Magic Envelope, and we scan them. We keep them all, ready for your accountant.
See how Shoeboxed keeps your receipts