Lease or Buy Your Next Business Vehicle?
Leasing usually costs less each month, while buying can give your business a bigger first-year tax deduction, especially for a vehicle over 6,000 lb with 100% bonus depreciation. This free 2026 calculator from SIM Financial Services shows which option gives you the biggest tax advantage and the lowest cost after taxes. It compares buying and leasing, each with the IRS standard mileage rate or actual expenses, using 2026 depreciation limits, lease inclusion rules and Arizona tax, then checks each option against your monthly budget.
Takes about five minutes. Enter your name and email to see your results and download a PDF copy. Planning estimate only, not tax advice.
Lease vs. Buy: Your Questions, Answered
Is it better to lease or buy a vehicle for my business?
It depends on the price, your miles and your tax situation. Buying usually gives a bigger first-year write-off through bonus depreciation, while leasing often costs less each month and spreads the deduction evenly. The calculator compares both, each with the standard mileage rate and with actual expenses, and ranks them by your cost after taxes.
What is the IRS standard mileage rate for 2026?
72.5 cents per business mile from January 1 to June 30, 2026, and 76 cents per mile from July 1, 2026 (IRS Notice 2026-10 and Announcement 2026-11). Business parking, tolls, the business share of loan interest and personal property taxes such as Arizona's vehicle license tax are deductible on top of it.
How much depreciation can I take on a business vehicle in 2026?
For vehicles rated 6,000 lb gross vehicle weight or less, first-year depreciation is capped at $20,300 with bonus depreciation ($12,300 without), then $19,800, $11,900 and $7,160 a year (Rev. Proc. 2026-15). Vehicles over 6,000 lb aren't capped, so 100% bonus depreciation can write off the business share in the first year. Business use must be over 50%.
Can I deduct lease payments for a business vehicle?
Yes. You can deduct the business-use share of your lease payments and operating costs, or use the standard mileage rate for the whole lease. If the vehicle's fair market value is over $62,000, the IRS adds a small lease inclusion amount to your income each year.
Does Arizona follow the federal rules for vehicle depreciation?
In effect, yes. Arizona adds back federal depreciation and subtracts its own recalculated amount, which for vehicles placed in service after 2016 includes bonus depreciation in full, so the deduction is the same at Arizona's 2.5% individual rate.