Your section 179 deduction is generally the cost of the qualifying property. However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit.
For a passenger automobile, the total section 179 deduction and depreciation deduction are limited. The total section 179 deduction and depreciation you can deduct for a passenger automobile, including a truck or van, you use in your business and first placed in service in 2023 is $20,200, if the special depreciation allowance applies, or $12,200, if the special depreciation allowance does not apply.
You cannot elect to expense more than $28,900 of the cost of any heavy sport utility vehicle (SUV) and certain other vehicles placed in service in tax years beginning in 2023. This rule applies to any 4-wheeled vehicle weight and not more than 14,000 pounds gross vehicle weight. However, the $28,900 limit does not apply to any vehicle:
- Designed to seat more than nine passengers 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 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.
You can carry forward the amount of section 179 property, if any, you elected to expense in previous years that was not allowed as a deduction if it was because of the business income limitation. The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year.
See IRS Publication 946 for more information.
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