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Section 179 Vehicle List and Tax Benefits Explained
6000+
pOUNDS
JAN 1- DEC 31
PURCHASE DATE
MUST BE PURCHASED
MUST BE PURCHASED
>50%
BUSINESS USE PERCENTAGE
NO LOSS
Deduction value cannot create a business loss
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Owning a business comes with a great deal of work and risk management. Business owners are always looking for ways to maximize profits and keep more of thier hard-earned money. One effective way to do that is by ensuring they’re maximizing available tax deductions. In this Market Intellect we highlight some of the ways in which vehicle expenses might be tax deductible. This article is not designed to be an exhaustive exploration of the tax law but more of a summary that can be used for a discussion with your tax professional.
Business Vehicle Use. Individuals who own a business or are self-employed and use their vehicle for business may deduct car expenses on their tax return. If a business owner uses the car for both business and personal purposes, the expenses must be split. Business car expenses can be determined by either actual expenses (e.g. gas, maintenance, etc.) or standard mileage rate (currently $0.655/mile). By claiming actual expenses, the business may qualify to write off a portion of the purchase price each year through Section 179 and bonus depreciation.
Section 179 Deduction. The Section 179 tax deduction allows eligible businesses to deduct the cost of machinery and qualifying equipment when filing their taxes. This could be office furniture, technology, supplies, and other tangible items. YES – this includes vehicles! The vehicle can be purchased new or used, but must be used more ethan 50% of the time for business purposes. If the vehicle is not used 100% for business then the expenses must be pro-rated. The Internal Revenue Service (IRS) breaks down the list of vehicles that qualify for Section 179 deduction into three primary groups: Light, Heavy, and Other. We will only discuss the Light and Heavy groups.
Light Section 179 vehicles: Any vehicle with a manufacturer’s gross vehicle weight rating (GVWR) under 6,000 pounds. This includes many passenger cars, crossover SUVs, and small utility trucks. For 2023, these autos have a Section 179 tax deduction limit of $12,200 in the first year they are used. Extra $8,000 of bonus depreciation (covered below) brings a combined maximum deduction of $20,200 for 20231.
Heavy Section 179 vehicles: Any vehicle with at least 6,000 pounds GVWR but no more than 14,000 pounds. This includes many full-size SUVs, commercial vans, and pickup trucks. For 2023, a vehicle qualifying in the “heavy” category has a Section 179 tax deduction limit of $28,900. However, these autos are eligible for 80% bonus depreciation in 2023 and 60% in 2024.2
Bonus Depreciation. Regular depreciation allows a business to write off the cost of a tangible asset over its life, which is the number of years the asset will be used. It is an expense that can offset income to immediately lower the tax due on income. The government knows businesses can stimulate the economy by buying things, so accelerating depreciation creates an incentive for businesses to make purchases. Bonus depreciation allows a business to take an immediate first-year deduction on the purchase of eligible business property, in addition to the asset’s regular depreciation schedule. The Tax Cut and Jobs Act of 2017 set the bonus depreciation at 100% through 2022 and goes down 20% each year thereafter until it goes to 0% in 2027.
For business vehicles in the light category bonus depreciation is capped at $8,000. However,for business vehicles it the heavy category there is no dollar bonus depreciation cap, just 80% of the purchase price.
So when looking for a new business vehicle think big!
2023 chart of Section 179 Compatible Vehicles
| MAKE | MODEL | APPROX GVW (LBS) |
|---|---|---|
| Bentley | Bentayga | 7,275 |
| Bentley | Bentayga Hybrid | 7,165 |
| Bentley | Bentayga Speed | 7,275 |
| Bentley | Flying Spur | 6,724 |
| Bentley | Flying Spur V8 | 6,724 |
| Bentley | Flying Spur W12 | 6,724 |
| Bentley | Mulsanne | 6,173 |
| Bentley | Mulsanne Speed | 6,173 |
| Bentley | Mulsanne Extended | 6,617 |
| Bentley | Continental GT | 6,316 |
| Bentley | Continental GTC | 6,008 |
| Aston Martin | DBX 707 | 4,940 |
| MAKE | MODEL | APPROX GVW (LBS) |
|---|---|---|
| BMW | X5, X7 | 7,165 |
| Bentley | Bentayga | 7,275 |
| Bentley Bentayga Hybrid | Bentayga Hybrid | 7,165 |
| Bentley | Bentayga Speed | 7,275 |
| Bentley | Flying Spur | 6,724 |
| Bentley | Flying Spur V8 | 6,724 |
| Bentley | Flying Spur W12 | 6,724 |
| Bentley | Mulsanne | 6,173 |
| Bentley | Mulsanne Speed | 6,173 |
| Bentley | Mulsanne Extended | 6,617 |
| Land Rover | Defender 110 | 7,165 |
| Land Rover | Defender 90 | 7,055 |
| Land Rover | Discovery | 7,165 |
| Land Rover | Discovery Sport | 6,724 |
| Land Rover | Range Rover | 7,165 |
| Land Rover | Range Rover Sport | 7,165 |
| Land Rover | Range Rover Velar | 6,724 |
| Land Rover | Range Rover Evoque | 6,724 |
| Mercedes-Benz | GLS 580 4MATIC | 6,768 |
| Mercedes-Benz | GLS 600 4MATIC | 6,768 |
| Mercedes-Benz | G 550 4×4 Squared | 7,057 |
| Mercedes-Benz | GLS 580 4MATIC | 6,768 |
| Mercedes-Benz | GLS 600 4MATIC | 6,768 |
| Mercedes-Benz | AMG G 63 4MATIC SUV | 6,724 |
| Porsche | Cayenne Turbo Coupe | 6,173 |
| Porsche | Cayenne Turbo S E-Hybrid Coupe | 6,173 |
| Porsche | Cayenne Turbo S E-Hybrid | 6,173 |
| Porsche | Panamera Turbo S E-Hybrid | 6,244 |
| Tesla | Model X | 6,000 |
wE HAVE A LARGE SELECTION OF SECTION 179 COMPLIANT VEHICLES.
DISCLAIMER: Information in this list is sourced from official car manufacturer websites, government databases, and automotive review websites and may not be accurate. Vehicle weights may vary by model year and configuration, and multiple weight classifications may apply. The listed weights are for standard configurations and should be used as estimates only, as actual GVW can differ due to engine size, trim level, towing package, and other factors. We are not liable for errors or inaccuracies in the information presented, and you assume any risk in using it. To verify a vehicle’s GVWR of over 6,000- pounds, check the driver’s door. For precise information on a specific vehicle’s GVW, consult a qualified professional.