It's Not Too Late to Maximize Your Business Vehicle Tax Deductions for 2024
As 2024 comes to a close, there is still time to reduce your tax liability through strategic vehicle purchases for business vehicle tax deductions. Whether you need a new SUV, pickup, van, or electric vehicle, there are significant deductions and credits available—but timing and proper planning are key.
At Ken-Mar Tax, we specialize in helping clients navigate tax-saving opportunities, including vehicle deductions. Here’s what you need to know to make the most of your year-end vehicle purchases.
Get the Timing Right for Your Business Vehicle Tax Deductions
To claim deductions or tax credits for a business vehicle in 2024, you must both:
- Own the vehicle and
- Place it in service (drive it at least one business mile) by December 31, 2024.
Acting now ensures you qualify for the available tax benefits and avoid missing out on these opportunities.
Tax Benefits by Vehicle Type
1. Heavy SUVs, Crossovers, and Vans (GVWR > 6,000 Pounds)
For vehicles classified as trucks with a gross vehicle weight rating (GVWR) over 6,000 pounds, you can claim:
- Section 179 expensing of up to $30,500,
- 60% bonus depreciation, and
- MACRS depreciation using the five-year schedule.
These vehicles are not subject to luxury depreciation limits, allowing for larger deductions. List of Popular Vehicles with GVWRs Greater Than 6,000 Pounds
Example:
If you purchase a qualifying SUV for $100,000 and use it 90% for business, your 2024 deductions could include:
- $30,500 in Section 179 expensing,
- $35,700 in bonus depreciation, and
- $4,760 in MACRS depreciation,
resulting in a total write-off of $70,960.
2. Pickup Trucks (GVWR > 6,000 Pounds with Cargo Bed ≥ 6 Feet)
Qualifying pickups offer even larger deductions:
- Section 179 expensing of up to $1,220,000,
- 60% bonus depreciation, and
- No luxury limits.
Example:
A $55,000 pickup truck used 91% for business qualifies for a full write-off of $50,050 under Section 179.
3. Cargo and Passenger Vans (GVWR > 6,000 Pounds)
Cargo vans with no seating behind the driver or passenger vans seating nine or more people qualify for:
- Up to $1,220,000 in Section 179 expensing,
- 60% bonus depreciation, and
- No luxury limits.
Key Note: Vans not meeting specific requirements may still qualify as SUVs, making them eligible for the $30,500 Section 179 expensing limit.
4. Depreciation-Limited Passenger Vehicles (GVWR ≤ 6,000 Pounds)
Passenger vehicles with lower weight limits are subject to stricter luxury depreciation caps, including:
- $12,400 in the first year,
- $19,800 in the second year,
- $11,900 in the third year, and
- $7,160 in subsequent years.
Planning Tip: To maximize deductions, focus on vehicles over 6,000 pounds GVWR to avoid luxury depreciation limits.
5. Electric Vehicles (EVs)
Purchasing a new electric or plug-in hybrid vehicle for business use may qualify you for a federal tax credit of up to $7,500. This credit applies before calculating deductions, reducing the vehicle’s basis for depreciation. New Business Tax Credits for Buying Electric Vehicles
Take Action Before December 31
Year-end vehicle purchases offer a powerful way to save on taxes, but timing and compliance are critical. At Ken-Mar Tax, we provide personalized guidance to help you choose the right vehicle and maximize your deductions. If you’d like personalized advice with your year-end tax planning, contact Ken Weinberg, EA, today at 440-777-2207 or fill out our contact us form.
Related Posts:
List of Popular Vehicles with GVWRs Greater Than 6,000 Pounds
Can You Write off More Than One Vehicle?
New Business Tax Credits for Buying Electric Vehicles
Can You Deduct a Home Office if You Have Another Office Outside the Home?
Understanding Tax Representation: Cleveland Tax Attorney or an Enrolled Agent?
Small Business Tax Services
As an expert in small business tax services and tax consulting Ken-Mar Tax eats, sleeps and breathes small business tax strategies. Being an enrolled agent allows founder, Ken Weinberg, to represent you to the IRS - something only a CPA, tax attorney and Enrolled Agent can do. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. It also means he is continuously being updated on the new IRS tax codes and taking classes from the IRS that provide guidance on how to file returns so that they are not "flagged."
When you get your taxes prepared by Ken Mar Tax you also have the option to purchase the Tax Audit Protection Plan to avoid the extra costs of paying for audit representation. If you are audited by the IRS, State of Ohio or local taxing authorities, Ken-Mar Tax will meet with the taxing authorities on your behalf to negotiate a settlement for you. The fee covers all costs up to the Appeals level, including up to 15 hours of correspondence with the auditing party – either the IRS, State of Ohio or locality.
