Vehicle Deductions: What’s Best for You?

Sandy Botkin
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Apparently I snore so loudly that it scares everyone in the car I’m driving.

                                                                 –Author unknown

Knowing some basic rules about your vehicles can make a HUGE difference in the amount of deduction that you get.

General rule: You can only deduct up to $11,160 in first year depreciation for most cars. However, there are a few vehicles that you can use in business that can generate a LOT more in first year depreciation.

Top Winner: New or used pick up trucks with a 6 foot cargo bed or bigger and a gross vehicle weight OVER $6,000. On this type of truck you can deduct 100% of the business cost using the section 179 expense election.. This is allowed up to $500,000, which should be enough for you.

Second best winner: A new (not used) SUV with a gross vehicle weight rating OVER 6,000 pounds. You can elect to write off up to $25,000 of the business cost PLUS you get 50% bonus depreciation on the remaining business cost

Example, you buy a $60,000 Cadillac Escalade that is used 90% for business. Thus, the business portion would be $54,000.

  1. You elect to write off $25,000 of the cost.
  2. You get 50% bonus depreciation of $14,500 (which is half of what was left over).
  3. You get regular depreciation.

Third best winner: Used SUVS: You can elect to write off $25,000 of the business cost plus regular depreciation.

Fourth best winner: Electric cars like Tesla models. They can generate ( pardon the pun) up to $7,500 in tax credits depending on the model and you can depreciate them as you would any car used in business.

Note: The expense election and bonus depreciation applies regardless of when you bought your car. Thus, if in the above example with the Cadillac, it was bought in December and used 90% for business, the same deductions noted would occur!

Sandy’s elaboration: Frankly, It is rather idiotic that Congress gives these great write offs for heavy metal cars that produce low mileage and no incentive for cars that give great mileage. Someone was paid off here.

Bottom line: Knowing which vehicles can produce the best write offs can result in a huge difference in what you pay in taxes.

2 weeks free

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