Can I Deduct My Weekly TLC Car Rental on Taxes?

Yes, if you use the actual-expense method. If you use the standard mileage rate, no. IRS Publication 463 says that when you choose actual expenses, "you can deduct the part of each lease payment that is for the use of the vehicle in your business." When you use the standard mileage rate, "you can't deduct depreciation, lease payments, maintenance and repairs, gasoline … oil, insurance, or vehicle registration fees" (Pub 463 (2025)). So the rent is deductible only if you give up the mileage rate for that car.

This is general information, not tax advice. A preparer should apply these rules to your rental contract.

Rent or mileage: you pick one

IRS rates checked 2026-10-12. Line numbers: 2025 Schedule C instructions.

Which is bigger depends on your numbers. TLC's December 2024 expense study estimated a full-time app driver renting a gas car spends about $1.028 a mile in total costs, against $0.782 for one who owns (TLC Driver Expense Report). Both are above the IRS rate. That is a study average, not your number. Figure both ways with your own receipts and miles.

The leased-car lock-in

Pub 463 has two rules that make your first choice matter for a leased car:

• "If you want to use the standard mileage rate for a car you lease, you must use it for the entire lease period."
• You can't use the standard mileage rate if you "claimed actual car expenses after 1997 for a car you leased."

So with a leased car you can't switch back and forth. Once you pick a method, it stays for that lease. The Schedule C instructions say the same: you can't use actual expenses for a leased vehicle if you used the standard rate for it before (Schedule C instructions, line 9). Many TLC rentals are open-ended weekly agreements. Ask your preparer how "lease period" applies to yours, and decide before you file the first year.

Three more points from Pub 463 for actual expenses:

• Personal use is not deductible. You can't deduct the part of a lease payment for personal use, such as commuting. Your mileage log gives the business percentage.
• Inclusion amount. For a lease of 30 days or more, you may have to reduce your lease deduction by an "inclusion amount" based on the car's value. Your preparer uses the tables in Pub 463.
• Rent-to-own. You "can't deduct any payments you make to buy a car … even if the payments are called 'lease payments.'" If your agreement includes a conditional purchase, the buy-out part is different.

The rental tax is part of the cost

TLC's expense study notes that short-term FHV rentals carry a 20.875% tax: 8.875% New York City sales tax plus a 12% New York State short-term rental tax (TLC Driver Expense Report). IRS Publication 334 says: "Treat any sales tax you pay on a service or on the purchase or use of property as part of the cost of the service or property." If the cost is a deductible business expense, so is the tax (Pub 334 (2025)). Under actual expenses, deduct the business share of rent plus its tax.

Look at your receipts for other weekly charges, too. The TLC study found some large rental companies bill a separate "For Hire Vehicle Permit Use" fee. Whatever the name, keep the receipt for each charge.

Documents to keep

TLC rule §59A-21(e) says the lessor must give you a written receipt for every payment or deduction, showing the date, recipient, the amount and calculations showing how it was determined, the purpose, and the lease section that allows it. The lease itself must be in writing, with a copy given to you (TLC Chapter 59). NYS asks drivers for "any lease agreement that was in effect for the tax year." For repairs or insurance, it also asks for a lease showing you are responsible for those costs (NYS Tax).

What to do next

Tolls work the same under both methods: see can I deduct tolls and parking?. TLC summonses are never deductible: see can I deduct TLC fines?. For the full method comparison, read standard mileage vs actual expenses and the deductions list. App drivers can start at taxes for Uber and Lyft drivers.