Leasing A Vehicle – What Is Deductible?

Michael Lodge

by Michael Lodge

I think I get the question almost on a weekly basis by clients – should I lease or buy.  When I tell them to lease (based on the type of business they are running) then the next question is what do I get to deduct?

Question: If I lease a vehicle, can I deduct the cost of the lease payments plus the standard mileage rate?

Answer:

If you lease a car you use in business, you may not deduct both lease costs and the standard mileage rate. You may either:

  • Deduct the standard mileage rate for the business miles driven. If you choose this method, you must use the standard mileage rate method for the entire lease period (including renewals).
  • Claim actual expenses, which would include lease payments. If you choose this method, only the business-related portion of the lease payment is deductible.

An income inclusion amount reduces both of these deductions.

If you have any questions please send us an email at:  tax@icontaxgroup.com