Quick answer
Driving 12,000 business miles of 15,000 total in a leased car, the actual-expenses method deducts $9,520 — $400 more than the $9,120 standard-mileage figure at the 76¢ rate — and saves $2,285 at a 24% tax rate. The winner depends on your car's running costs, not on a rule of thumb.
How the Business Vehicle Tax Deduction Calculator works, step by step
Enter your monthly lease payment, down payment and lease term, your business and personal miles, annual gas, insurance and repair costs, and your tax bracket. The calculator runs both IRS methods on the same numbers and shows which one deducts more — the standard mileage rate and the actual-expenses method rarely agree, and the gap is usually hundreds of dollars.
The standard mileage method multiplies your business miles by the IRS standard mileage rate — 76 cents a mile for July to December 2026 (72.5 cents for January to June). It is simple, and it needs nothing beyond a mileage log. The rate is designed to cover the full cost of running a car, including depreciation, so it suits economical cars with low running costs.
The actual-expenses method adds up your real costs — annual lease payments, the down payment spread over the lease term, gas, insurance and repairs — then multiplies the total by your business-use percentage. A $3,600 down payment on a 36-month lease adds $100 a month, or $1,200 a year, to the deductible base. Business-use percentage is business miles ÷ total miles.
Which method wins depends on the car. Actual expenses usually win for expensive vehicles, high lease payments or heavy running costs; the standard rate usually wins for cheap, economical cars driven a long way. The calculator picks the larger deduction and multiplies it by your tax bracket to show the saving — the deduction itself is not the saving, the bracket turns it into one.
Either method needs a mileage log: the date, destination, business purpose and miles of each trip, plus your total miles for the year. Only the business-use share of any cost is deductible. One thing the calculator does not model: leased luxury vehicles face an IRS inclusion amount that reduces the deduction — check it with a CPA before relying on the figure for an expensive car.
The formula
Standard mileage deduction = business miles × standard mileage rate. Actual expenses deduction = (annual lease + amortized down payment + gas + insurance + repairs) × business-use %, where business-use % = business miles ÷ total miles.
Worked example — try it on the calculator above
Worked example: leased car, 12,000 business miles
A leased car is driven 12,000 business miles and 3,000 personal miles, so business use is 12,000 ÷ 15,000 = 80%. The lease is $600 a month with a $3,600 down payment on a 36-month term; gas is $1,800, insurance $1,200 and repairs $500 a year. The standard mileage method gives 12,000 × $0.76 = $9,120. The actual method gives ($7,200 lease + $1,200 amortized down payment + $1,800 gas + $1,200 insurance + $500 repairs) × 80% = $11,900 × 80% = $9,520. Actual expenses win by $400, and at a 24% tax bracket the deduction saves $2,284.80.
Frequently Asked Questions
Can I write off a leased car as a 1099 contractor?
Yes. A 1099 contractor can deduct the business-use portion of a leased vehicle using either the standard mileage rate or the actual-expenses method — the business share of lease payments, gas and insurance. At the defaults, 80% business use makes the actual method worth $9,520 against $9,120 for standard mileage.
Is it better to lease or buy a car for tax write-offs?
It depends on the vehicle. Buying a heavy vehicle (over 6,000 lbs gross vehicle weight) can qualify for a large first-year Section 179 deduction, while leasing spreads the deduction evenly over the lease term and is usually better for cash flow. Run both scenarios through the calculator with your own numbers before deciding.
Can I write off 100% of my car lease?
Only if the vehicle is used 100% for business, which the IRS scrutinizes closely. If you drive 15,000 miles a year and 12,000 are for business, your business-use percentage is 80% and you can deduct only 80% of the lease payments and running costs. Personal miles never count, under either deduction method.
How do I deduct the down payment on a leased business vehicle?
You cannot deduct a lease down payment in the year you pay it. It must be spread evenly over the lease term: a $3,600 down payment on a 36-month lease adds $100 a month, or $1,200 a year, to your deductible costs. The calculator amortizes it automatically, then applies your business-use percentage to the total.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.