If you're not self-employed, no, you can't deduct interest fees. According to the IRS, only a few categories of interest payments are tax-deductible:
- Interest on home loans (including mortgages and home equity loans)
- Interest on outstanding student loans
- Interest on money borrowed to purchase investment property
- Interest as a business expense
All other interest is considered personal interest, which includes interest charged on credit cards, auto loans, unpaid utility bills and late payment or underpayment of federal, state and local income taxes.
If you're self-employed, "Business interest," meaning interest paid on any loan taken out for business purposes, is considered a legitimate business expense, and that includes interest on credit cards. However, the debt must be related to a trade or business activity. You can't use your company credit card for personal expenses and then deduct the interest.
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