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TAX LAW 179

Thinking of buying a new or used vehicle for your business?

Business vehicles are one of many great tax write-offs available to you as a business owner.

If the vehicle qualifies you could write off the purchase price of the car or truck, plus the operating expenses if you use it for business.

But before you rush off to go car shopping it’s important you know what a “Section 179 Vehicle” is. And if possible, purchase one of those types of vehicles in order to maximize your tax deductions.

Section 179 of the tax code basically allows you to deduct the full purchase price of a vehicle (or other qualifying equipment) in the year you purchase it.

The Tax Cuts and Jobs Act that was passed in late 2017 also allows unlimited 100% first-year depreciation for the new or used vehicle as long as it is acquired and placed into service between 9/28/17 and 12/31/22.

In other words, if you buy a Section 179 Vehicle it can potentially save you A LOT of money on your taxes.

So what is a Section 179 Vehicle?

These are heavy SUVs, trucks and vans that must have a gross vehicle weight of at least 6,000 pounds. Typically vehicles will list their weight on the side door (so you can check there when you’re shopping).

Here’s an example of some of the vehicles that weigh over 6,000 pounds:

Here is a list of vehicles with a gross loaded weight of over 6,000 lbs that qualify for the Section 179 Deduction. We have tried to make the list as exhaustive as possible; however, you can check the car manufacturer’s website to determine how much the vehicle weighs or you can look inside the driver’s door to verify the GVW rating of the vehicle.

 

  • Audi Audit Q7 3.0T Premium

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If you use the vehicle entirely for business then you can write off 100% of it. However, if it’s used, say 75% for business and 25% for personal use then you can only write off 75% of it.

Your tax savings will depend on your situation but it’s not uncommon for people to basically get a 20-30% discount on their vehicle once they factor in the tax deductions.

https://www.section179.org/section_179_deduction/ect ion 179 Deduction Section 179 at a Glance for 2020 What is the Section 179 Deduction Most people think the Section 179 deduction is some mysterious or complicated tax code. It really isn’t, as you will see below. Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It’s an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves. Several years ago, Section 179 was often referred to as the “SUV Tax Loophole” or the “Hummer Deduction” because many businesses have used this tax code to write-off the purchase of qualifying vehicles at the time (like SUV’s and Hummers). But that particular benefit of Section 179 has been severely reduced in recent years (see ‘Vehicles & Section 179‘ for current limits on business vehicles.) However, despite the SUV deduction lessened, Section 179 is more beneficial to small businesses than ever. Today, Section 179 is one of the few government incentives available to small businesses and has been included in many of the recent Stimulus Acts and Congressional Tax Bills. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses – and millions of small businesses are actually taking action and getting real benefits.

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