Section 179
Quick definition
A federal tax provision that lets businesses deduct the full cost of qualifying vehicles in the year of purchase, instead of depreciating them over time.
Section 179 lets businesses immediately deduct the full purchase price of qualifying vehicles, instead of spreading the deduction across years through depreciation.
Vehicle qualification
Vehicles must be used for business more than 50% of the time. The deduction is reduced proportionally if business use is below 100%. Heavy SUVs and pickups (over 6,000 pounds gross weight) are eligible for the full deduction up to annual limits. Passenger cars are subject to the luxury auto cap, which limits the Section 179 deduction to a much smaller figure.
Why it matters
For owners of business pickups, work vans, or large SUVs, Section 179 plus bonus depreciation can produce a deduction of $30,000 to $80,000+ in year one, dwarfing what the standard mileage rate would generate. This is why high-cost-vehicle owners almost always use the actual expenses method.
Recapture risk
If business use drops below 50% in a future year, you have to recapture some of the Section 179 deduction (add it back to income). Track business-use percentage carefully each year.
Related terms
Depreciation
Deducting the purchase cost of a business vehicle over its useful life, instead of all at once.
Actual Expenses Method
Deduct real vehicle costs times your business-use percentage, instead of using a flat per-mile rate.
Business-Use Percentage
Business miles divided by total miles. Used to scale the actual-expenses deduction.
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