Tax Law (Questions About Taxes)/Company Car Tax Benefit?


Hello, Mr. Klein. My name is Jon and I have a quick tax question for you. I have an S Corporation (I'm a performing artist) and I was trying to determine if it's a good idea to lease a new vehicle through my corporation. Does that make good tax sense? Or is it no better than buying a car as an individual? I can't seem to find a good answer online and I would love any thoughts you might have. I always here of "company cars" and wondered if this is something that would make sense for me.

My sincere thanks for you help.


The tax deduction of a vehicle follows the same rules whether the corporation owns or leases the car or you personally own or lease a car.

If the corporation owns the vehicle, personal use can still be taxable income to you. This is especially true if you use the car 50% or less for business.

The real disadvantage to having a car titled in the name of the business is that most areas around the country have an ad valorum tax (property tax) on assets used in the business. So if you don't mind paying an addition 1-2% of the value of the vehicle each year, then titling it in the name of the corporation is fine.

If you have a van, for instance that is 100% used for business to haul equipment around, it may, in fact, be easier to have the vehicle held in the business' name.  

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Randall Klein, MBA, EA


I am an expert in personal and small business taxation, including Forms 1040, 1120, 1120S, 1065. I can answer any type of tax question except those that are requesting help in illegal tax evasion. Tax avoidance is legal, however. I do not do offshore trusts, or opt-out of the tax system type of queries.


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