Is Rental Car Tax Deductible for Your Business?

Yes, rental car is generally tax deductible for self-employed individuals, freelancers, and small business owners. The IRS allows you to deduct ordinary and necessary business expenses, and rental car typically qualifies when used for legitimate business purposes.

Key Rules for Deducting Rental Car

Rental car costs during business travel at the destination are fully deductible.

Requirements to Claim This Deduction

• Must be during business travel
• Keep rental agreement and final receipt

How to Document Rental Car for Tax Purposes

Proper documentation is critical for any business deduction. For rental car, you should:

• Keep all receipts and invoices showing the amount paid
• Record the date of the expense and the business purpose
• If mixed-use, maintain a log showing business vs. personal usage
• Store records for at least 3 years (7 years for major purchases)

Source: IRS Publication 463. This information is for educational purposes only. Consult a qualified tax professional for advice specific to your situation.