Vehicle Cost Depreciation Expense

[Momma2016]

If a rideshare driver buys a vehicle for $25,000 to use for rideshare starting June 2024, and his vehicle will have to go out of service after the 2025 year, because Uber Black vehicles cannot be older than 5 years, will it benefit him to claim depreciation/section 179 for the price of the car? 

[AmeliesUncle]

In most cases, using the Standard Mileage Rate works out better for most ridesharing drivers.  If this is a Uber Black vehicle, that MIGHT possibly change things (depending on the vehicle), but I suspect the Standard Mileage Rate may still be better.

If you use the Standard Mileage Rate, you would not claim separate depreciation (the depreciation is built-in to the Standard Mileage Rate) or claim Section 179.

If you choose to claim Actual Expenses (and therefore depreciation, and possibly Section 179) rather than using the Standard Mileage Rate, claiming accelerated depreciation and/or Section 179 can give you a significantly larger deduction for this year.  However, if/when the business percentage drops to 50% or less (such as in 2026 when it can't be used for Uber Black), you would need to "recapture" (pay back) some of the accelerated depreciation or Section 179, which could result in a very large tax bill for that year.