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SR Client Question: How much can I deduct for a leased car on my tax return

[1]When a taxpayer leases a vehicle and uses it in a trade or business, the taxpayer may deduct the lease expense based on the proportion that it is used for business.

For example, if a business owner uses a leased vehicle 80% for business, then they may deduct 80% of the lease payments as a business expense. Instead of deducting the lease payments and other operating expenses of the lease vehicle, taxpayers also have the option of using the standard mileage rate (55.5 cents per mile in 2012) for business miles.

Why can’t I deduct 100% of the vehicle?

How do you calculate the lease inclusion amount?

For more information about leased vehicles or other accounting questions, please contact us [3].