Alternating current (AC) copper losses in motors increase with carrier frequency of the pulse width modulation (PWM) and are further increased by leakage flux of the permanent magnet. Therefore, AC copper losses increase with motor speed. Conventional techniques for reducing AC copper losses tend to increase other losses. In this paper, AC copper loss was reduced by wrapping a magnetic tape made of a magnetic composite material around the winding. This method controlled the flux path through the winding. Magnetic composite materials are mixtures of magnetic powders and liquid resins whose magnetic properties can be manipulated by changing the combination and other factors. When Fe–Si–Al magnetic tape was wrapped around the winding, the AC copper loss was reduced by 40%. The loss was further reduced by optimizing the magnetic properties of the magnetic composite material. The AC copper loss was maximally reduced when the specific permeability was 100 and the saturation flux density was 1.6. Magnetic tapes composed of magnetic composite materials with high saturation flux density and specific permeability reduce the AC copper losses without increasing other losses in the motor.