Deducting Car and Truck Expenses

Those who use their personal car for business can deduct expenses related to this use. The tax law provides two ways to account for business expenses: deduct the actual costs allocated to business driving or claim an IRS-fixed standard allowance determined by the number of business miles driven during the year.

Deductions for business use of a car are allowed whether the vehicle is owned or leased. However, different rules apply in these circumstances.

The usual limits applicable to cars owned and used in business do not apply to certain heavy SUVs and to certain vehicles not likely to be used for personal purposes.

The purchase of a hybrid vehicle may entitle you to a tax credit. The vehicle need not be used for business purposes in order to qualify for the tax credit.