When you own a business, there are a number of tax deductions you can take each year for expenses incurred as part of operating the business and conducting regular business activities. Some deductions, such as a car rental, can be taken if you were traveling for business purposes when you rented the car. Each business tax deduction has specific rules and regulations. If you're unsure about whether a specific business expense is tax-deductible, consult with a professional tax adviser or an Internal Revenue Service consultant.
When you are traveling for business purposes outside your normal home and business area, there are several different types of deductions you can claim on your taxes. To qualify for travel business deductions, you must be away from your standard working area for substantially longer than a normal work day or you must need to rest in order to continue your business-related activities.
If you need to rent a car to conduct business while away on travel, the rental costs are deductible on your income taxes. If you use the car for personal purposes while renting, you can deduct only the business-related portion of use on your taxes.
Related car rental expenses such as gasoline, washing, parking and toll fees may also be deductible if they were incurred as a business expense.
Car rental and related costs are deductible as a business expense only if they are not reimbursed by an employer or client.