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What is the difference between deducting a car loan vs. a lease payment?

With a loan, you deduct depreciation and interest, not the payment itself. With a lease, you deduct the actual lease payment. The timing and amount of the deductions differ: loan deductions are front-loaded through Section 179/bonus depreciation, while lease deductions are spread evenly over the lease term. Both methods can be effective depending on your tax situation.

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