Business Vehicles and the Different Ways to Depreciate them..

Planning to buy more business vehicles this year? New to this year  the Tax Cuts and Jobs Act increased bonus depreciation to 100%.


Unlike most tax provisions that involve a tax election, the one requires you to elect out of the option if you choose to do so.


Example: If you or your corporations buy (2) $50,000 trucks, each with a gross weight rating of 6500 pounds and a bed length of 6.5 feet. You use the trucks 100% solely for business. Because of the weight and the bed side, the trucks are exempt from the luxury passenger vehicle depreciation limits.


There are 5 ways on how to deduct the vehicles:


  1. Do nothing. This forces you to use the bonus depreciation and deduct the entire 100,000 cost in year one. In Addition, you deduct operating expenses such as gas, oil, insurance, etc.
  2. Elect out, choose Section 179 expensing of any amount of your $200,00 cost of trucks, and depreciate the balance.
  3. Elect out, don’t use the section 179, and depreciate the trucks using the five-year MACRS depreciation schedule (which takes six years).
  4. Elect out, don’t use Section 179, and depreciate the trucks using the five-year straight-line depreciation schedule (which also takes six years).
  5. Use the 57.5 cent IRS standard mileage rate for each business mile driven. The 57.5 per mile rate includes operating expenses and 27 cents a mile for depreciation.



Not sure if you’re choosing the right option for you and your business? Tax Planning is the best way to get the bigger picture and make sure you are making the correct decision that won’t affect you at tax time. Call in today to schedule an appointment to get yourself and education opinion on how to handle your business vehicle purchases! 480-355-1398

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