Can I Deduct a Leased Car for Business?

Leasing a vehicle for your business comes with its own set of deduction rules, and it can be a tax-efficient option for some business owners. If you use a leased vehicle entirely for business, you can deduct the full lease payment as a business expense. If the vehicle is used for both business and personal purposes, you deduct the lease payment multiplied by the percentage of business use. The IRS requires you to include an income adjustment for luxury vehicles to limit the deduction for higher-priced cars. Keeping a mileage log to document the business use percentage is just as important with a leased vehicle as it is with one you own.