If you are looking to purchase a vehicle for your business, you may be eligible for a beneficial tax deduction. Section 179 allows accelerated depreciation expense which can reduce your taxable income. Here are some of the main things to know.
Eligible Business Vehicles: The deduction applies to vehicles used for business purposes, whether they are purchased outright, leased, or financed through Section 179 Qualified Financing. The vehicle must be titled in the company's name and used for business at least 50% of the time.
Full Deduction Vehicles: Vehicles primarily used for business purposes qualify for a full Section 179 deduction. This includes vehicles like shuttle vans, classic cargo vans, over-the-road tractor trailers, and special-purpose business vehicles such as ambulances or hearses.
Partial Deduction Vehicles: Trucks and SUVs with a Gross Vehicle Weight Rating (GVWR) over 6,000 lbs can qualify for a partial deduction if they are used for business purposes over 50%. The exact deduction limits vary depending on the type of vehicle.
Deduction Limits: The deduction cap for heavy SUVs (over 6,000 lbs GVWR) is $28,900 for the year 2023. The vehicle must be used for business at least 50% of the time to qualify for the deduction.
Claiming the Deduction: The Section 179 deduction can be claimed in the tax year when the vehicle is placed in service or ready for use, even if it's not immediately used.
Used Vehicles: Both new and "new to you" used vehicles can qualify for the Section 179 Deduction.
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