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How to Take Advantage of the Section 179 IRS Tax Deduction for Your Business Vehicle
Ready to save on taxes? Explore how Section 179 deduction can help your business by allowing you to deduct the full cost of qualifying property.
Building the right tech stack is key
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How to choose the right tech stack for your company?
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What to consider when choosing the right tech stack?
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What are the most relevant factors to consider?
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What tech stack do we use at Simpletech?
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Are you in the market for a new business vehicle? If so, you may be wondering if you can take advantage of the Section 179 tax deduction.
Want the Cliff-Notes
If you purchase a vehicle through your business that has a gross vehicle weight of over 6,000 pounds, you can deduct the entire purchase price of the vehicle on your taxes.
Getting Started:
To take advantage of the Section 179 deduction, you must first purchase or lease a qualifying vehicle. A qualifying vehicle is a vehicle that is used for business purposes and has a gross vehicle weight (GVW) of over 6,000 pounds.
Some specific examples of qualifying vehicles include:
- Mercedes G-Class
- Tesla Model X
- Range Rover P525
- Chevy Silverado 3500 Duramax Diesel
- And more…(full list included below)
Just remember, the vehicle must be used primarily for business purposes and be purchased through your business.
**If the vehicle is not purchased through your business, you will not be able to take advantage of Section 179. The IRS does not allow you to personally purchase the vehicle and transfer it to your business - it must be purchased originally by the business.
If you're not sure if your vehicle qualifies, you can check the IRS website or reach out to our team.
How Much Can You Deduct?
Under Section 179 Bonus Depreciation, you are allowed to deduct 100% of the purchase price in the year the vehicle is purchased and placed into service.
For example, if you purchase a Mercedes G-Class for $115,000, you are allowed to deduct 100% of the purchase price in the year it is purchased. This is a significant advantage over standard depreciation, which would only allow you to deduct a portion of the cost over the useful life of the vehicle (i.e. assuming a 5 year useful life, you’d only be allowed to deduct $23,000 per year).
How to Claim the Deduction:
You can claim the deduction by filing Form 4562 with your tax return. You will need to provide information about the vehicle, such as the make, model, year, and purchase price. You will also need to provide proof of purchase, such as a sales receipt or finance contract.
If you're in the market for a new business vehicle, be sure to take advantage of the Section 179 deduction. This deduction can save you thousands of dollars on your taxes.
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