Buy a Vehicle for Your Business
Thinking about buying a truck, SUV, or other vehicle for your business? One of the first questions we usually hear is:
“Can I write the whole thing off?”
The answer is: possibly—but there’s more to consider.
Start With Business Use
The biggest factor is how much you actually use the vehicle for business.
If a vehicle is used 80% for business and 20% personally, you generally can't deduct 100% of the cost and expenses. That's also why keeping good mileage records matters.
Mileage or Actual Expenses?
Businesses generally have two approaches to vehicle deductions:
Standard mileage – Track your business miles and use the IRS mileage rate.
Actual expenses – Deduct the business portion of expenses such as fuel, insurance, repairs, maintenance and depreciation.
Which is better? It depends on the vehicle and how you use it.
What About the 6,000-Pound Rule?
You've probably heard something like:
“Buy a truck over 6,000 pounds and write the whole thing off.”
It's not quite that simple.
Heavier vehicles can qualify for more favorable depreciation rules, and Section 179 and bonus depreciation can sometimes produce a significant first-year deduction. But vehicle type, business use and other limitations still matter.
Can You Finance the Vehicle?
Generally, yes.
Paying cash isn't necessarily required to claim depreciation. A financed vehicle placed in service for your business may still qualify for depreciation based on its cost.
S-Corp Owners Should Plan Ahead
If you own an S-Corporation, it's worth talking with your tax professional before buying the vehicle.
Sometimes it makes sense for the corporation to own it. Other times, personally owning the vehicle and being reimbursed for business use may make more sense.
Remember: A Write-Off Doesn't Make It Free
A $70,000 truck doesn't save you $70,000 in taxes.
A deduction reduces your taxable income, and taking a large depreciation deduction today can also have tax consequences when the vehicle is eventually sold or traded.
Buy the vehicle because your business needs it—not just because you want a tax deduction.
Then make sure it's structured in the most tax-efficient way.
Considering a business vehicle purchase? Talk with Rangeview before you sign the paperwork. A little planning beforehand can make a big difference at tax time.
See if Rangeview Tax & Accounting is a good fit for you! We offer in-person, ZOOM, and telephone chats.
