Tax Incentives
Tax Incentives
Tax rules for vehicle purchases have changed, which means businesses of every size have an opportunity to save. Coupes, sedans, small trucks, and small SUVs can deduct up to $18,000 per vehicle1, while larger trucks, SUVs, and vans can deduct up to 100% of the purchase price2. Consult your tax advisor for tax implications and savings opportunities.
Federal tax depreciation deductions are only available for vehicles used in a trade or business, and are subject to change without notice. Each taxpayers’ tax situation is unique-please consult your tax advisor to determine your business’ vehicle depreciation deduction. For more information, visit irs.gov. This advertisement is for informational purposes only, and should not be construed as tax advice, or as a promise of the availability or amount of any potential tax benefit or reduced tax liability.
| UP TO $18,000 (NO AGGREGATE LIMITATION) |
UP TO 100% OF PURCHASE PRICE PER VEHICLE (NO PER-VEHICLE OR AGGREGATE LIMITATION) |
|---|---|
| Buick LaCrosse | Buick Enclave |
| Buick Regal | Cadillac Escalade |
| Buick Regal Sportback | Cadillac Escalade ESV |
| Buick Regal TourX | Cadillac XT5 Crossover |
| Buick Verano | Chevrolet Suburban |
| Buick Cascada | Chevrolet Tahoe |
| Buick Encore | Chevrolet Traverse |
| Buick Envision | Chevrolet Silverado 1500 |
| Cadillac ATS Coupe | Chevrolet Silverado 2500HD |
| Cadillac ATS Sedan | Chevrolet Silverado 3500HD |
| Cadillac ATS-V Coupe | Chevrolet Silverado 3500HD Chassis Cab |
| Cadillac ATS-V Sedan | Chevrolet Express Passenger Van |
| Cadillac CT6 | Chevrolet Express Cargo Van |
| Cadillac CTS Sedan | Chevrolet Express Cutaway |
| Cadillac CTS-V Sedan | Chevrolet Low Cab Forward |
| Cadillac XTS Sedan | GMC Sierra 1500 |
| Chevrolet Bolt EV | GMC Sierra 1500 Denali |
| Chevrolet Camaro | GMC Sierra 2500HD |
| Chevrolet Corvette Stingray | GMC Sierra 2500HD Denali |
| Chevrolet Cruze | GMC Sierra 3500HD |
| Chevrolet Impala | GMC Sierra 3500HD Denali |
| Chevrolet Malibu | GMC Yukon |
| Chevrolet Sonic | GMC Yukon Denali |
| Chevrolet Spark | GMC Yukon XL |
| Chevrolet Volt | GMC Yukon XL Denali |
| Chevrolet City Express | GMC Acadia |
| Chevrolet Colorado | GMC Acadia Denali |
| Chevrolet Equinox | GMC Savana Passenger Van |
| Chevrolet Trax | GMC Savana Cargo Van |
| GMC Canyon | GMC Savana Cutaway |
| GMC Canyon Denali | |
| GMC Terrain | |
| GMC Terrain Denali |
- Passenger automobiles, as defined in the Internal Revenue Code (including SUVs, trucks and crossovers with a GVWR up to 6,000 lbs.), and placed in service during 2018 qualify for immediate depreciation deductions of up to $18,000 per vehicle.
- Trucks, vans and sport utility vehicles as defined in the Internal Revenue Code with a GVWR over 6,000 lbs. and placed in service during 2018 qualify for immediate depreciation deductions of up to 100% of the purchase price.
Vehicles and Section 179
One of the more popular uses of the Section 179 Deduction has been for vehicles. In fact, several years ago the Section 179 deduction was sometimes referred to as the “Hummer Tax Loophole,” because at the time it allowed businesses to buy large SUV’s and write them off. While this particular use (or abuse) of the tax code has been modified with the limits explained below, it is still true that Section 179 can be advantageous in buying vehicles for your business.
Vehicles used in your businesses qualify – but certain passenger vehicles have a total deduction limitation of $11,160, while other vehicles that by their nature are not likely to be used more than a minimal amount for personal purposes qualify for full Section 179 deduction (Full policy statement available at: IRS.gov).
Note: the deduction for business vehicles is the same whether they are purchased outright, leased, or financed with Section 179 Qualified Financing.
What Business Vehicles Qualify for the full Section 179 Deduction?
Note that because many vehicles can serve business and personal function both, the rules for business vehicle deductions are always evolving, and can be complicated. It’s easier to list the typical vehicles that will generally qualify for a full section 179 deduction, and then discuss the rules for other vehicles.
Many “work vehicles” that, by their nature, are not likely to be used for personal purposes will usually always qualify for full Section 179 deduction. This includes the following vehicles: Vehicles that can seat nine-plus passengers behind the driver’s seat (i.e.: Hotel / Airport shuttle vans, etc.).
Vehicles with: (1) a fully-enclosed driver’s compartment / cargo area, (2) no seating at all behind the driver’s seat, and (3) no body section protruding more than 30 inches ahead of the leading edge of the windshield. In other words, a classic cargo van.
Heavy construction equipment will qualify for the Section 179 deduction, as will forklifts and similar.
Typical “over-the-road” Tractor Trailers will qualify.
What are the limits on Typical Passenger Vehicles used for Business?
For passenger vehicles, trucks, and vans (not meeting the guidelines below), that are used more than 50% in a qualified business use, the total deduction including both the Section 179 expense deduction as well as Bonus Depreciation is limited to $11,160 for cars and $11,560 for trucks and vans.
Exceptions include the following vehicles:
Ambulance or hearses used specifically in your business
Taxis, transport vans, and other vehicles used to specifically transport people or property for hire.
Qualified non-personal use vehicles specifically modified for business (e.g. work van without seating behind driver, permanent shelving installed, and exterior painted with company’s name)
Other heavy “non-SUV” vehicles and trucks with a cargo area at least six feet in interior length (this area must not be easily accessible from the passenger area.) To give an example, many pickups with full-sized cargo beds will qualify for a full deduction (although some “extended cab” pickups may have beds that are too small to qualify).
Limits for SUVs or Crossover Vehicles with GVW above 6,000lbs
Certain vehicles (with a gross vehicle weight rating above 6,000 lbs. but no more than 14,000 lbs.) qualify for deducting up to $25,000 if the vehicle is purchased and placed in service prior to December 31 and meets other conditions.
Update / IRS Guidelines for Vehicles
As stated earlier, the vagueness of business vs. personal use can be complicated. To help, please refer to page 6 of these Instructions for Form 2106 to read the exact IRS language. For complete IRS information on Depreciation and Amortization, see Instructions for Form 4562.
Other Considerations
The vehicle must also be used for business at least 50% of the time – and these depreciation limits are reduced by the corresponding % of personal use if the vehicle is used for business less than 100% of the time. Remember, you can only claim Section 179 in the tax year that the vehicle is “placed in service” – meaning when the vehicle is ready and available – even if you’re not using the vehicle. Further, a vehicle first used for personal purposes doesn’t qualify in a later year if its purpose changes to business.
As always, if you have questions, consult your tax professional for exact rules regarding Section 179 and vehicles.
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