Running any kind of vehicle can be expensive at the best of times, and with prices increasing in gas, insurance, and maintenance, it’s worth knowing that certain “rides” are eligible for a tax deduction via the IRS.
According to section 179 of the federal tax code, vehicles over 6,000 pounds qualify for a tax deduction – meaning you could receive a healthy payout for running a heavy goods vehicle!
But, how much is the tax deduction, what qualifies a vehicle, and what vehicles actually weigh more than 6,000 lbs? Let’s take a closer look.
What is the 6,000-pound vehicle tax deduction?
The 6,000-pound vehicle tax deduction allows owners of such a vehicle to deduct up to $25,000 of its purchase price on their tax return. You can find full details in section 179 of the federal tax code.
The max deduction rates can and will change in tax years to follow, so always keep a close eye on tax shifts.
The idea behind this tax deduction is that it will – ideally – encourage business owners to invest in new vehicles to expand their enterprises. It’s all about giving back to the economy.
However, you’ll need to follow a few simple rules and eligibility requirements before you can mark the money off your next IRS return.
How you can apply for this deduction
As is likely obvious, the first step is weight – your vehicle must weigh over 6,000 pounds. That is, according to the Gross Vehicle Weight Rating (GVWR).
However, there is also a limit to the weight claimable. This tax deduction does not apply to vehicles that weigh over 14,000 pounds – so, always check before filling anything out.
Your vehicle will also need to be provably used for business purposes – meaning even if you use a business vehicle for personal reasons the majority of the time, it’s unlikely to qualify for the deduction.
You may be asked to prove its purpose by providing records of its trips – if you’re using it more for business than leisure, you should remain eligible.
The business name must also appear on the vehicle title. If there is only your given name on the title, you won’t qualify for the deduction.
If you want to claim the deduction in time for your next return, your vehicle must be put into service before the 31st of December of the tax year in question. You’ll need to take out an IRS-recognized loan arrangement or take the vehicle out on lease.
Remember, too, that you won’t be able to claim more than $1 million in deductions at any one time. That means, however, that fleet owners can claim on multiple heavy vehicles at once.
How much of a deduction on my tax return can I receive?
The percentage of your vehicle’s business use will reflect the ratio of tax deduction you can legally receive.
For example, if you use your vehicle around 20% of the time for personal reasons and the other 80% of the time for business, then you would receive a maximum deductible of $20,000 instead of the full $25,000.
Naturally, if you can prove that you only ever use your 6,000 pound-plus vehicle for business reasons, you may receive the full reduction of $25,000. But, as with all tax affairs, tread carefully.
You’ll also need to keep the 50/50 threshold in mind. If it’s proven that you only use your vehicle for business purposes less than 50% of the time, then you will not be eligible for a deduction at all.
Which vehicles weigh more than 6,000 pounds?
If you own any of the following vehicles and run them for business purposes, you’ll likely be able to claim the tax exemption.
- Audi Q7
- BMW X5, X6
- Buick Enclave
- Cadillac Escalade
- Cadillac XT5,
- Cadillac XT6
- Chevrolet Silverado
- Chevrolet Suburban
- Chrysler Pacifica
- Dodge Durango
- Dodge Grand Caravan
- Ford Expedition
- Ford Explorer
- Ford F-150
- GMC Acadia
- GMC Sierra
- GMC Yukon
- Honda Pilot 4WD
- Honda Odyssey
- Infiniti QX80
- Infiniti QX56
- Jeep Grand Cherokee
- Land Rover Range Rover
- Land Rover Discovery
- Lexus GX460
- Lexus LX570
- Lincoln MKT AWD
- Lincoln Navigator
- Mercedes-Benz G550
- Mercedes-Benz GLS
- Mercedes GLE
- Mercedes Metris
- Mercedes Sprinter
- Nissan Armada
- Nissan NV 1500
- Nissan NVP 3500
- Nissan Titan
- Porsche Cayenne
- Tesla Model X
- Toyota 4Runner
- Toyota Landcruiser
- Toyota Sequoia
- Toyota Tundra
Of course, this list is by no means exhaustive!
US taxation can be tricky to balance if you’re a new business owner, but remember, there are reliefs out there you can claim. On the other hand, if you’re an employee, you’ll want to keep check of bonus taxation so you can avoid confusion and disappointment.
FAQs
How do I prove that I use my vehicle for business purposes?
Ideally, you’ll need to keep full details of when and where you bought your vehicle, how much you purchased it for, and what you intend to use it for.
In the event of an audit, you may need to prove to the IRS that you use your vehicle for business mileage and demonstrate how it helps you run your business.
Will the vehicles over 6,000 pounds tax deduction go away in 2024?
No – there’s no indication that this tax deductible will retire any time soon. However, do always make sure to check the latest IRS rules from year to year so you’re clear on what you need to pay, and when.
Do I have to buy a new car for the section 179 tax deduction?
No, section 179 of the federal tax code applies to both new cars and used vehicles. As long as the vehicles weigh over 6,000 pounds and meet all of the other criteria (which are noted above), you can receive the tax deduction.
