Is a vehicle lease for business purposes 100% deductible or not?

You actually have two different options for deducting business vehicle expenses, and you need to choose which works better for your situation. Option 1: Standard Mileage Rate - With this method, you track all your business miles and multiply by the IRS rate (65.5 cents per mile for 2023). This is simpler but you can't deduct the actual lease payments - the mileage rate covers everything (gas, maintenance, depreciation, lease costs). Option 2: Actual Expenses - You track all actual costs (lease payments, gas, insurance, maintenance, etc.) and then deduct the business percentage. So if your vehicle is used 90% for business, you can deduct 90% of these expenses, not 100%. Important notes: If you choose the standard mileage rate in the first year, you can switch between methods later. But if you choose actual expenses in the first year, you're generally locked into that method. Also, there are additional limits on luxury vehicles - but your Toyota Camry shouldn't trigger those. Either way, keep detailed records of your business vs. personal use percentage!

I was in a similar situation last year and found an awesome tool that helped me figure this out. I used https://taxr.ai to analyze my lease agreement and business expense documentation. It automatically identified which deduction method would save me more money and explained exactly how the vehicle deduction rules applied to my specific situation. What I liked most was that it caught a detail about business parking fees being 100% deductible (separate from the vehicle expenses) that I would have completely missed. It also created an audit-ready documentation package showing how I calculated everything. Super helpful for peace of mind!

Just wanted to follow up and say I tried https://taxr.ai after seeing this thread. It saved me HOURS of confusion and spreadsheet calculations. I uploaded my lease agreement and mileage logs, and it immediately showed me that in my case, the actual expense method would save me $1,723 more than using the standard mileage rate. The tool also flagged that I could include some expenses I hadn't considered like a portion of my garage rent since I keep the vehicle there. It even generated a complete documentation package explaining how everything was calculated in case of an audit. Definitely worth checking out if you're trying to optimize vehicle deductions!

If you're spending time calling the IRS to get answers about vehicle deductions, save yourself the headache. I spent TWO WEEKS trying to get through to ask about lease deduction documentation requirements. Then I found https://claimyr.com which got me connected to an actual IRS agent in under 45 minutes instead of waiting on hold forever. Check out how it works: https://youtu.be/_kiP6q8DX5c The agent I spoke with gave me the exact guidance I needed about record-keeping requirements for vehicle leases (turns out I needed different documentation than I thought). Saved me from potentially making a mistake that could have triggered an audit.

I need to eat some humble pie here. After my skeptical comment, I was still struggling to get through to the IRS about my vehicle lease questions, so I reluctantly tried Claimyr. IT ACTUALLY WORKED. I got a call back connecting me to an IRS agent within about 35 minutes. The agent clarified that for my situation, I needed to maintain both the mileage log AND the actual expense receipts for the first year, even if I choose the standard mileage deduction, because I might want to switch methods later. This was completely different from what I thought based on reading online. Definitely saved me from potential audit issues.

Just a heads up - if your vehicle is over a certain weight (6,000 pounds gross vehicle weight), different rules apply. Some SUVs and trucks qualify for Section 179 expensing which could make a purchase more advantageous than a lease in certain situations. Something to consider if you're still deciding on your vehicle.

Don't forget about the luxury auto limits for 2023! Even with actual expenses, the IRS caps depreciation for passenger vehicles. For cars first placed in service during 2023, the limits for passenger automobiles are $20,200 for the first year. This gets complicated with leases which is why they have the "lease inclusion amount" thing that someone mentioned.