Section 179, a business tax code, is a useful tool that offers tax deductions on select business equipment – such as vehicles – as an alternative to asset depreciation. It gives you a chance to
deduct up to $27,000* of a qualifying vehicle from your business’s gross income during that tax year—that’s up to $5,670 in savings.** In some cases you may even be able to deduct the full purchase price of your vehicle. (Please consult your tax professional to find out if you qualify for the full amount). It’s especially helpful for small businesses who want their tax savings right away, rather than receiving them bit by bit over time through depreciation. It gives many businesses the financial leeway to purchase vehicles they need right away, rather than waiting.
• Are a business that purchased or financed qualifying new or used business equipment, including certain business-use vehicles, during the 2022 tax year.
• Put the equipment into service between January 1, 2022, and December 31, 2022.
• Used this equipment for business purposes more than 50% of the time.
• Spent less than $3,780,000 on this equipment.
• You cannot write off more than $1,080,000.
• The total amount of the equipment purchase cannot be more than $2,700,000. It phases out dollar-for-dollar after that, so once $3,780,000 is spent, the deduction goes away entirely.
• Section 179 allows qualifying businesses to deduct up to the full purchase price of certain new or used vehicles, equipment and/or software purchased and placed into service during the tax year.
• To qualify, the percentage of business use for the vehicle, equipment or software must be more than 50%.