Quick Facts About Section 179 Deductions
- You can get a tax write-off if you purchase a vehicle that weighs over 6,000 pounds for business purposes.
- Section 179 deductions allow companies to write off up to $30,500 of the purchase price of a qualifying vehicle used for business purposes.
- Some buyers might also be eligible for bonus depreciation, which allows businesses to write off 60% of the vehicle’s depreciation in its first year of use.
- Companies must keep the vehicle in business use throughout its useful life or pay back part of the deduction.
A section of the IRS tax code provides additional deductions to business income in the year a company puts a car, truck, SUV, or van into service. Learn about the Section 179 deduction and bonus depreciation rules that can reduce your company’s tax liability when you buy a vehicle for business use. Keep reading for information on how to get a business tax break on vehicles over 6,000 pounds.
- What Is the Section 179 Deduction for Vehicles?
- What Cars Qualify for the Section 179 Deduction?
- What Is the Downside to Section 179 Deductions?
- Will Section 179 Go Away in 2024?
- Section 179 Definitions to Know
What Is the Section 179 Deduction for Vehicles?
The primary aim of Section 179 deductions is to encourage businesses to invest in themselves by purchasing vehicles and other equipment, which stimulates the economy. Check with your tax professional for advice on whether Section 179 can help you and your small business’s bottom line.
The Section 179 deduction is a significant tax benefit for many companies that buy and use vehicles for their business. The provision allows a company to write off some or all of the purchase price of a qualifying automobile in the year it is bought and put into service.
While limitations exist, the Section 179 deduction offers businesses with company vehicles an opportunity for substantial tax savings in the current tax year rather than spreading out a deduction as depreciation over the vehicle’s expected life. Generally, depreciation rules in tax law consider five years to be the “useful life” for most vehicles.
How Does the Section 179 Tax Break Work?
Business taxpayers complete IRS Form 4562 and select the Section 179 deduction when filing. Section 179 eligibility requires the vehicle to be used 50% or more for business purposes. Vehicles solely used for business receive the maximum deduction, and the amount decreases proportionately as personal use increases.
Under Section 179, businesses can deduct the cost of qualifying property as an expense rather than capitalizing and depreciating smaller amounts over several years. For heavy vehicles, those with a gross vehicle weight rating (GVWR) above 6,000 pounds, the total cost of the car can be deducted in the year it is placed in service, up to the specified limits.
GVWR is the maximum allowable weight of a vehicle, including passengers and cargo. Most passenger vehicles have the GVWR printed on a safety compliance label on the inside edge of the driver’s side door or the door frame.
In addition to the deduction, some buyers might be eligible for bonus depreciation, which we address below. Simply put, bonus depreciation allows businesses to lower taxable income by writing off part of the vehicle’s cost in its first year of use.
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Section 179 Deduction: Example of a Calculation
Here is a rough calculation showing how the Section 179 deduction and bonus depreciation can save your small business money.
Suppose you buy a used full-size SUV for $75,000 in 2024 to use exclusively for your business. Because it’s a heavy SUV and 100% of its use is for company business, you can take the limited Section 179 deduction of $30,500 on your 2024 tax return. Additionally, you can claim a first-year bonus depreciation deduction on the remaining cost of $44,500 ($75,000 minus $30,500). For 2024, that’s 60% of the figure, or $26,700 (60% of $44,500). Your total write-off for the SUV is $52,700 ($30,500 plus $26,700).
Your tax advisor can help determine if Section 179 applies to your situation.
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What Cars Qualify for the Section 179 Deduction?
Vehicle eligibility depends on various factors, so consult your accountant or tax professional who’s familiar with your situation. The basic qualifying criteria are that the vehicle must be used for business within the first year of the purchase and that at least 50% of its operation must be for a business purpose.
In general, new and used vehicles bought or financed and put into business use in the same year may qualify under Section 179 deduction rules, which might permit you to deduct the full cost. However, the tax year 2024 limit on deductions for heavy SUVs with GVWRs between 6,001 and 14,000 pounds is $30,500.
The limitation does not apply to heavy vehicles that aren’t SUVs, including:
- Vans with seating for nine or more behind the driver’s seat, such as shuttle vans
- Vehicles with no seating behind the driver’s seat
- Vehicles with cargo areas not readily accessible from the passenger compartment
- Vehicles with no body section extending more than 30 inches beyond the windshield, such as many delivery vans
Vehicles with a GVWR under 6,000 pounds may qualify for Section 179 deductions, but the amount for light vehicles is less than that of heavy vehicles.
Deductions and depreciation dollar amounts are less when the vehicle operation is split between business and personal use. If business use is 50% or less, a company cannot claim a Section 179 deduction or bonus depreciation.
Heavy Vehicles Eligible for Section 179
Here is a list of 15 popular SUVs from model years 2024 and 2025 with a GVWR greater than 6,000 pounds that may qualify for Section 179 deductions.
| Make and Model | Approximate GVWR (pounds) |
| Jeep Grand Cherokee/Grand Cherokee L | 6,050/6,500-6,700 |
| Ford Explorer | 6,060-6,150 (with 3.0-liter V6) |
| Jeep Wrangler | 6,400 (with 6.4-liter V8) |
| Toyota 4Runner | 6,005-6,505 |
| Toyota Grand Highlander | 6,010-6,340 |
| Ford Bronco 4-Door | 6,040-6,180 (with some 2.3-liter and all 2.7-liter models) |
| Chevrolet Tahoe | 7,400-7,600 |
| Ford Expedition | 7,200-7,600 |
| Chevrolet Traverse | 6,160 |
| Nissan Pathfinder | 6,063 (4WD Platinum) |
| GMC Yukon | 7,400-7,700 |
| BMW X5 | 6,173-7,055 |
| Dodge Durango | 6,500-7,100 |
| Jeep Wagoneer/Jeep Wagoneer L | 7,300-7,500/7,400-7,700 |
| Chevrolet Blazer | 6,001 |
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What Is the Downside to Section 179 Deduction?
Buy a vehicle for your business and claim a deduction to offset your tax liability. Nothing wrong with that, right? While that may be true, there are limits, and the deductions aren’t always as lucrative as they might be mentioned in casual conversation.
Still, cutting $30,500 from the cost of an $80,000 full-size SUV you use exclusively for your business is substantial.
The biggest potential downside of using the Section 179 deduction is that you must keep the vehicle in business use throughout its useful life. If you convert it from entirely business use to personal use, or the percentage of its business use falls below the 50% threshold, you have to pay back part of the deduction as a Section 179 recapture.
Be sure to discuss potential trade-offs with your accountant.
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Did Section 179 Go Away in 2024?
Section 179 is part of the IRS tax code for tax year 2024 as an incentive for small and medium-sized businesses to purchase equipment needed for growth.
If you believe you were eligible for Section 179 in 2023 but didn’t claim the deduction on your company tax return, talk to a tax professional about amending the return to include the deduction.
Section 179 Definitions to Know
Tax matters are complex, and we recommend you seek advice from professionals to help avoid mistakes and ensure you claim appropriate deductions. Meanwhile, let’s define a couple of terms we mentioned above.
Depreciation — Depreciation is a noncash accounting charge that reduces the value of an asset, reducing a company’s net earnings and tax liability. For example, if your business purchases a vehicle for $50,000, you could depreciate its value for tax purposes over its useful life of five years, recording a noncash expense of $10,000 for each of those five years.
Bonus Depreciation — Bonus depreciation is an accelerated business tax deduction. Instead of spreading a tangible asset’s cost evenly across its useful life, bonus depreciation allows a substantial tax break in the first year. Congress enacted bonus depreciation in 2002. Updates since then have changed eligibility requirements and bonus depreciation rates, which will be phased out in 2027. The bonus depreciation rate for 2024 is 60%. It will decrease to 40% for tax year 2025 and 20% in 2026.
Bottom Line on Section 179
The Section 179 deduction and bonus depreciation offer businesses significant tax incentives for purchasing heavy vehicles over 6,000 pounds GVWR, allowing immediate write-offs of up to $30,500 for qualifying SUVs in 2024. However, strict eligibility criteria apply, and you should consult a tax professional to navigate limitations, maximize deductions, and avoid compliance risks.
Editor’s Note: This article has been updated since its initial publication.
