If you plan to take a mileage deduction, you’ll likely be interested in knowing that Congress passed the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) late last year. This retroactively extended or made permanent dozens of tax provisions that had expired at the end of 2014. Among the provisions of most interest to business owners who use their cars for business is the bonus depreciation.
The business vehicle depreciation deduction for your work car can lead to some large tax savings. Keep in mind that you can only benefit from this if you use the actual expense method. Let’s go over some of the basics you should know about vehicle depreciation.
If you purchased a vehicle in 2014 that you used for business, you get to deduct your business driving expenses for the year. There are two ways to do this: (1) you can use the standard mileage rate, which permits you to take a mileage deduction for a specified sum for each business mile you drive (56 cents per mile for 2014), or (2) you can deduct the actual expenses you incurred when you drove for business, including gas, repairs, and maintenance costs.
One of the nice things about having your own business is that you can deduct the money you spend for things you use to make money in your business, such as computers, cars and other vehicles, and office equipment and furniture. You can take a full deduction whether you pay cash for an asset or buy on credit.