FirstRock Advisors

The tax benefits of leasing a vehicle for business purposes. Here’s a breakdown:

For Business Use

If you lease a vehicle for business purposes, you may be able to deduct certain expenses on your taxes:
1. Lease Payments Deduction – You can typically deduct the portion of your lease payments that corresponds to business use. If you use the vehicle 80% for business, you can deduct 80% of the lease payments.
2. Mileage Deduction – Instead of deducting lease payments, you may choose to deduct the standard mileage rate (if applicable).
3. Depreciation Alternative – Unlike purchased vehicles, leased vehicles don’t qualify for depreciation deductions, but the lease payments often provide a similar benefit.
4. Other Expenses – Insurance, maintenance, and registration fees related to business use can also be deducted.
5. Luxury Auto Lease Inclusion – If the leased vehicle is above a certain value, the IRS requires an “inclusion amount,” which reduces the deductible portion of the lease payments.

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