• Leasing a vehicle provides tax benefits not available to car owners.Shiny car with silver paint. Water drops on the hood. Car lamp. image by Christopher Meder from Fotolia.com
  
  Although people who intend to keep a car after it's paid off will save money by buying it outright, there are tax incentives that make leasing attractive. Although the tax breaks may be minimal, they'll help reduce liabilities at the end of the year for anyone who doesn't claim a standard deduction.
  
  

Sales Tax Benefits

• When you purchase a car from a dealer, you're assessed the sales tax immediately when you take possession of the car and it's rolled into your payment plan. When you lease a car, you're only liable for sales tax assessed in monthly payments. The difference may be large in the long run, if you get a new car every few years. If you purchase a $25,000 vehicle and are assessed 6 percent sales tax, you'll face $1,500 in taxes immediately. If lease payments for the same vehicle total $10,000, you'll only be liable for $600 in sales taxes, effectively giving you an additional $900 to put toward a new lease if you don't buy the car outright.
  
  

Depreciation Deduction

• When deducting the value of a car on income taxes, you'll only be able to claim the depreciation on the car each year. In virtually all payment plans, you'll end up paying more than the car actually depreciates through the year. Because of this, the money spent beyond approved depreciation amounts can't be claimed on your taxes. In a lease, you pay only for the depreciation on a vehicle based on lease company depreciation tables. Additionally, approved depreciation amounts almost always exceed monthly payments, allowing you to deduct all the money spent on car ownership from your taxes.
  
  

Deductible Miles

• If you lease a car for business purposes, mileage may be claimed as a deduction at year's end. For the 2010 tax year, the Internal Revenue Service allowed a deduction of 50 cents per business mile traveled. For business drivers who travel 10,000 miles a year, that's a $5,000 above-the-line deduction.