You may be able to deduct car rental costs that you incur as a result of moving to a new job or taking yourself or family members to obtain medical care. The Internal Revenue Service has determined that the flat mileage rate for these deductions for 2009 taxes is 24 cents per mile. What the IRS is not clear on is whether you can choose to deduct the cost of renting a car in these situations, rather than taking the standard mileage deduction. The deduction for medical expenses can include the mileage for driving to and from hospitals and medical offices, but the total medical expense deduction is limited to the amount that is over 7.5% of your income. So, if your total medical expenses are less than this for the year, you can’t take a mileage deduction for your personal car or rental car use.

For moving expenses, the IRS rules state that you must be moving due to a change in your employment, such as a new job or a transfer of your existing job, and your new work location has to be at least fifty miles farther from your old home than your old job was. If you don’t meet this test, then you cannot deduct moving expenses. The IRS instructions do not specifically address whether you can deduct car rental fees instead of using the standard mileage rate, so you should consult with your tax advisor before you decide how to handle these costs on your tax return.

If you use a rental car in the course of running a business that you own, then the rental costs are deductible as a business expense. The only situation that this might not apply to would be if you rent or lease a car and run your own business, but your only use of the car is for driving between your home and place of business.