How Does Section 179 Apply to Vehicles?

Kristy Brown

Many business owners have heard of the Section 179 deduction in relation to capital assets that are purchased. However, special rules are in effect regarding Section 179 as it relates to the purchase of vehicles. Read on to see if your vehicle purchase will qualify for the Section 179 deduction.

For a majority of passenger vehicles that are used primarily for business, total depreciation allowed in a year, including Section 179, is limited to $11,160. For trucks and vans, the deduction is limited to $11,560 per year. As with any rule, however, there are exceptions.

A $25,000 deduction is allowed by businesses who purchase a vehicle that has a gross vehicle weight of over 6,000 lbs. but not over 14,000 lbs.

A full deduction equal to 100 percent of the total cost is allowed for businesses in certain industries. If you are in the ambulatory industry and purchase an ambulance, you can deduct 100 percent of the cost in the first year using Section 179. This same rule applies to businesses that utilize a hearse in their normal course of business, i.e., funeral homes. Taxis and transport vans are a few additional examples where 100 percent of the cost can be deducted using Section 179.

It is always best to consult your accountant when you are thinking about purchasing a capital asset, especially vehicles, to ensure you have a correct understanding of the deduction for which you will qualify.

Kristy Brown

Kristy Brown

CPA

Kristy Brown, CPA, is a tax supervisor in Yeo & Yeo’s Flint office. She provides tax planning and preparation services, and business consulting services, with an emphasis on manufacturing and healthcare. She is a member of the firm’s State and Local Tax Team, and the Compilation and Review Team. She is also a Certified QuickBooks ProAdvisor.