Question: Can I purchase a vehicle for my business that weighs more than 6,000 pounds for $50K and deduct the amount on my tax return?
I get a lot of questions on this topic pretty frequently. The answer is “Yes” you can deduct up to $50K BUT with some limitations and special rules that you need to follow.
Just a little background on this….The Tax Cuts and Job Act (TJCA) of 2017 implemented a 100% additional first year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the business.
Specifically for vehicles, the gross vehicle weight must be greater than 6,000 but less than 14,000 pounds and:
- Designed to seat more than nine persons behind the driver’s seat;
- Equipped with a cargo area (either open or enclosed by a cap) of at least 6 feet in interior length that is not readily accessible directly from the passenger compartment; or
- That has an integral enclosure fully enclosing the driver compartment and load carrying device, does not have seating rearward of the driver’s seat, and has no body section protruding more than 30 inches ahead of the leading edge of the windshield.
Here is a link for a list of “Eligible Vehicles”
Currently, you can take a 100% expense deduction on a new or used vehicle purchased and placed into service before December 31, 2022. However, the amount is reduced by the percentage the vehicle is actually used by your business.
As always, it best to discuss with your Tax Advisor on whether it is in the best interest to claim the maximum deduction available or another expense method depending on your business’ goals.
Until next time, don’t hesitate to reach out to your Friendly CPA (Me- Danielle Robinson)
