Tax Tip #193

For vehicles placed in service in 2024, depreciation limits are $20,400 for year one, $19,800 for year two, $11,900 for year three and $7,160 for each year after that. This includes passenger cars as well as SUVs, trucks and vans if their gross vehicle weight (GVW) is 6,000 pounds or less.

New or used vehicles may be eligible for a full write-off, known as Section 179 expensing. However, a reduced Sec. 179 limit ($30,500 for 2024) applies to vehicles (typically SUVs) with GVWs of more than 6,000 pounds but no more than 14,000 pounds. Bonus depreciation is also an option, which permits 60 percent of the cost to be deducted.

If a vehicle is used for both business and personal purposes, depreciation must be allocated between deductible business use and nondeductible personal use. The depreciation limit is reduced if the business use is less than 100 percent. If business use is 50 percent or less, bonus depreciation or Sec. 179 expensing is not an option.

Considering purchasing or leasing a vehicle and want to know the tax benefit for doing so? Reach out to a member of our team.