The Basics of Section 179 Vehicle Deduction
Owning a business can be stressful at times, and it's almost always hard work, but business owners have access to tax benefits that others don't, and they can add up to big savings at the end of the year. Section 179 is one such benefit that allows business owners to purchase vehicles and other equipment, and receive a tax credit when it comes time to file.
Section 179 allows business owners to deduct the cost of a vehicle or equipment and is limited to $1,080,000. The vehicle must be used at least 50 percent of the time for work, and the deduction amount is based on the vehicle value multiplied by the percentage of time it's used for business.
How to Qualify
In order to qualify for Section 179, a vehicle must be a:
- Special-use vehicle such as ambulances, hearses, etc.
- Delivery vehicle
- Heavy work vehicle like dump trucks and farm tractors
- Truck, SUV, or van with a gross vehicle weight rating (GVWR) of more than 6,000 pounds
What Vehicles Qualify
The GVWR is the maximum loaded weight that a vehicle can sustain, including passengers, fuel, and any cargo. Though you might assume that the weight requirement means that only heavy-duty commercial-type vehicles are eligible for the deduction, but that's not true. A partial list of Chevrolet vehicles eligible for Section 179 in 2023 includes:
- Express Van
- Silverado 1500
- Silverado HD
Several other General Motors models also quality, including the Cadillac Escalade, GMC Sierra, Buick Enclave, and more. The deduction applies to both new and used vehicles, but the vehicle must be "new to you" to qualify. The vehicle must be placed into service during the tax year and can be financed.
Of course, you'll need to keep detailed records to make sure that you're properly tracking your vehicle usage under Section 179. If you use the vehicle for personal reasons, such as commuting or picking up groceries, you should keep a log to show the times it was used for non-business purposes.
How Can I Make Sure I Fit the Regulations?
Finally, it's important to check with an accountant or tax professional to make sure that you are in compliance with local rules and regulations. There may be state-level requirements around taking the tax deductions, so it's a good idea to get the full picture before starting your shopping journey.
When you're ready to purchase a new vehicle for your business, McFarland Chevrolet has a range of Section 179-eligible models, and our knowledgeable staff will be excited to answer all of your questions.