vehicle purchase

Rmichaelsonza — Wed, 30 Oct 2024 18:02:13 GMT

self-employed individual here. what is the tax policy deducting full amount of vehicle if more than 2000 lbs?

Re: vehicle purchase

marctu — Wed, 30 Oct 2024 18:10:02 GMT

So you are referring to a Section 179 deduction. IRS Section 179 is one such deduction that both businesses and self-employed individuals can take advantage of. It covers many types of property as a deductible expense, including vehicles. However, not all types of vehicles qualify.

Autos may be passenger vehicles, heavy SUVs, trucks, and vans that are purchased and put into use in the same year. A Section 179 tax deduction covers new vehicles as well as pre-owned vehicles. However, the vehicle must be utilized more than 50% of the time for business purposes.

Light Vehicles

Any vehicle with a manufacturer’s gross vehicle weight rating (GVWR) under 6,000 pounds (3 tons).

For 2024, these autos have a Section 179 tax deduction limit of $12,400 in the first year they are used. Bonus depreciation can also be used, which means the combined maximum is $20,400 for 2024.

Heavy Vehicles

Any vehicle with at least 6,000 pounds GVWR but no more than 14,000 pounds (3 to 7 tons)

For 2024, eligible vehicles in the “heavy” category have a Section 179 tax deduction limit of $30,500. However, these autos are eligible for 60% bonus depreciation through the end of 2024. Starting in 2025, the allowable bonus depreciation percentage will decrease to 40%.

I do hope this is helpful @Rmichaelsonza

All the best,

Marc T.

TurboTax Live Tax Expert

27 Years of Experience Helping Clients

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Re: vehicle purchase