Do you want to know how buying an expensive vehicle can lower the tax burden for your business?
· SUV’s, trucks, and vans with a gross vehicle weight between 6,000 - 14,000 pounds are not subject to annual depreciation caps
· What does this mean?
This means you can write off the entire cost of one of these vehicles in the first year against your income.
The one caveat is that it must be used greater than 50% of the time for business purposes.
If it is used 100% for business the entire cost can be written off
If it’s used between 50-100% for business only the business portion can be deducted
This tax strategy utilizes Section 179 of the IRC as well as bonus depreciation. For tax year 2022, the first $27,000 of the cost of an SUV is deducted using Section 179. Any remaining cost can be deducted using 100% bonus depreciation.
2022 is the last year to claim 100% bonus depreciation. In 2023 only 80% of the cost of qualifying property can be deducted with less in years following. The 100% bonus depreciation deduction extends to other qualifying property with a useful life of 20 years or less.
