Updated: August 7, 2018
You can take a mileage deduction by tracking your miles. Alternatively, you can take a depreciation deduction if you use the actual expense method. There are strict limits to this if you have a “passenger automobile.” Yet, business vehicles like trucks, vans or SUVs can qualify for a larger write-off. Let’s go over Section 179 vehicles deductions. We’ll also dive into the deduction limits.
What Section 179 Vehicles Qualify for the Full Deduction?
The depreciation deduction limits apply only to “passenger automobiles.” That means vehicles with a gross unloaded weight of less than 6,000 pounds. That weight limitation applies to your business truck, van or vehicle with a truck base (like most SUVs). The gross loaded weight is based on how much the manufacturer says the vehicle can carry. This is different from unloaded weight. That is, the vehicle’s weight without any passengers or cargo.
Trucks that weigh 14,000 pounds or less fully loaded are subject to the same rules as passenger automobiles unless the vehicle is not likely to be used for personal purposes. In that case, the vehicles are not considered passenger automobiles and the limitations on depreciation don’t apply.
SUVs, trucks, vans, and other vehicles that don’t qualify as passenger automobiles are not subject to the IRS limits and can take a full depreciation deduction each year. Using bonus depreciation and/or Section 179, you may be able to deduct all or most of the cost of such a vehicle in a single year.
This is a potentially enormous deduction for business people who purchase heavy SUVs and similar vehicles for their business.
Section 179 Deduction for 2017
|Type of Vehicle||Section 179 Limit|
|Passenger Cans and Trucks||$11,160|
|SUVs (between 6,000 - 14,000 pounds)||$25,000|
Section 179 Vehicles Deduction for 2018 Tax Year and Beyond
The new tax law has a major impact on the write off you can take for Section 179 vehicles. It changed the depreciation limits for vehicles placed in service after Dec. 31, 2017.
Here’s the limit you can claim for depreciation if you haven’t claimed bonus depreciation.
|Year Placed in Service||Depreciation Deduction|
|Each Taxable Year After||$5,760|
Section 179 Vehicle Deduction Limits For 2018 with Bonus Depreciation
If you’ve claim 100 percent bonus depreciation, your deduction limits are:
|Year Placed In Service||Depreciation Limit w/Bonus|
|Each Year After||$5,760|
Bonus Depreciation For Section 179 Vehicles
If you placed a heavy vehicle into service in 2017, you can get a 50 percent first-year bonus depreciation. That means you could deduct 50 percent of the cost in one year if you used the vehicle 100 percent for business purposes.
Businesses can depreciate 50 percent of the cost of equipment put into service during 2015, 2016 and 2017. The current rules say the bonus depreciation will phase down to 40 percent in 2018 and 30 percent in 2019.
Section 179 Vehicles Expensing
Section 179 also allows you to deduct a specified amount of the total cost of all tangible personal property used at least 51 percent of the time for business. The Section 179 deduction limit is $500,000 for 2017. Remember, you can’t deduct more than you made in annual business profit. So, if you don’t make a profit, you don’t get the deduction.
Section 179 Changes With The New Tax Law
The new tax law just passed has greatly expanded the bonus depreciation for Section 179 Vehicles. The major changes include:
- The bonus depreciation amount is now 100 percent for assets placed in service after Sept. 27, 2017
- The new law now applies to used equipment
- The deduction limit is now increased to $1 million
How To Qualify For The Section 179 Deduction
To qualify for the Section 179 vehicle deduction and bonus depreciation, you must use it for business more than 50 percent of the time. This is true for the full five-year depreciation period that applies to vehicles.
If your use dips below 50 percent during any of that five-year period, you’ll have to repay your deduction and bonus depreciation. That’s why it’s vital to track your business mileage, no matter what method you’re using to take a deduction.
List of Section 179 Vehicles
You’ll find a list of Section 179 vehicles below. These are vehicles with a loaded weight of over 6,000 pounds.
By no means is this an exhaustive list. You can consult a car manufacturer’s website to see how much a vehicle weighs.
|Audi||Audit Q7 3.0T Premium||6479|
|Land Rover||Range Rover||7033|
|Ram||ProMaster 1500 Cargo||8550|
|Ram||ProMaster 2500 Cargo||8900|
|Ram||ProMaster 3500 Cargo||9350|
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.