Maximizing Tax Deductions When Purchasing a Business Vehicle

February 18, 2025
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If you’re thinking about purchasing a vehicle for business use, you could be eligible for significant tax deductions. The right approach can help you maximize savings, especially when combined with a qualifying home office. Here’s how you can take advantage of these deductions in 2025.

Heavy Vehicle Deductions

Businesses have several tax advantages when purchasing heavy vehicles. These include:

  • Section 179 Expensing – You can deduct up to $1,250,000 of qualifying business equipment, including heavy vehicles. While SUVs have a $31,300 deduction cap, pickups and vans that meet specific criteria are not subject to this limit.
  • Bonus Depreciation – Businesses can claim 40 percent first-year depreciation on qualifying heavy vehicles.
  • Business-Use Requirement – To qualify for these deductions, the vehicle must be used for business more than 50 percent of the time.

A “heavy” vehicle is classified as one with a gross vehicle weight rating (GVWR) over 6,000 pounds. Many SUVs, pickups and vans qualify, while lighter vehicles are subject to lower annual depreciation limits.

Home-Office Deductions

If you have a deductible home office, your commuting miles can be converted into business miles. This makes it easier to meet the 50 percent business-use requirement.

To qualify, your home office must be:

  • Used regularly and exclusively for business purposes.
  • The primary location where you generate income or perform most administrative tasks.

Example of Tax Savings

A $90,000 heavy SUV used 100 percent for business could generate $61,824 in first-year deductions. A qualifying pickup truck used for business could allow you to deduct the full $90,000 in Year One under Section 179.

For Corporate Owners

If you personally own the vehicle but operate as a corporation, ensure your corporation reimburses you for business use. This helps you capture the full tax benefit while maintaining compliance with IRS guidelines.

By leveraging these tax-saving opportunities, you can make a smart financial decision when investing in a business vehicle.

For more tax savings tips and professional tax planning guidance, contact Illumination Wealth today.

 

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