Car Lease Tax Deductions

Lease payments for a vehicle used for business are deductible based on the business-use percentage. Leasing can offer simpler deductions than owning.

car leasevehicle leaseauto leasebusiness vehicle

check_circleWhat You Can Deduct

  • checkMonthly lease payments (business portion)
  • checkDown payment on lease (business portion)
  • checkLease inception fees
  • checkEarly termination fees (if business-related)
  • checkExcess mileage charges at lease end
  • checkLease extension costs

lightbulbTips for Keeping Records

  • tips_and_updatesTrack business vs. personal miles to determine the deductible percentage
  • tips_and_updatesThe IRS may require an inclusion amount adjustment for luxury vehicles
  • tips_and_updatesKeep the lease agreement and all monthly statements
  • tips_and_updatesCompare leasing vs. buying from a tax perspective with your CPA

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