Leasing a business car is an alternative to buying one. If you use the car entirely for business, the cost of leasing is fully deductible. If you make advance payments, you must spread these payments over the entire lease period and deduct them accordingly. You can choose to deduct the standard mileage rate in lieu of actual expenses (including lease payments).
The taxpayer reduced their taxable income by $5,000 by deducting the cost of leasing a car for business. Since the business income was taxed at the 30% tax bracket, the income reduction may decrease their income taxes by $1,500 ($5,000 x 30%).
If you are in a combined (federal, self-employment, and state) tax bracket of 30%, you could reduce your taxes up to $300 for every $1,000 of income reduction by deducting the cost of leasing a car for business.