The 6,000-pound vehicle tax deduction refers to Section 179 of the IRS tax code enacted by various Stimulus Acts. It is one of the few tax incentives that work in the favor of small businesses, as of 2012. Typically, equipment purchased by a business can be expensed as depreciation over several years. Section 179 allows the cost of the equipment to be deducted as a business expense in the same year the purchase was made. Of course, as with any piece of tax legislation, it comes with limitations.
Section 179 and Vehicles
When the Tax Relief Act and Jobs Act of 2010 passed, Section 179 was sometimes called the Hummer Tax Loophole, because businesses were able to buy, and write off, oversize SUVs. While changes to the tax code eliminated this abuse, vehicles purchased for use in your business may still qualify. There are limitations on the deductions for passenger vehicles that may have purposes other than business use, but a vehicle that by its nature is more likely to be used mostly for business, such as a pickup truck, may qualify for the full deduction.
Limits on Passenger Vehicles
If you buy a truck, passenger car or van, and use it more than 50 percent of the time for business, the depreciation deduction is limited to $11,060 for a car and $11,160 for trucks or vans. To qualify for the full deduction, it must be demonstrated that the vehicle is not driven for personal use, such as a van with shelving installed, no seats behind the driver and the company name painted on the outside.
Limits for Crossover Vehicles or SUVs with GVWR Above 6,000 Lbs.
Vehicles with a gross vehicle weight rating between 6,000 lbs. and 14,000 lbs. may qualify for the deduction. If the vehicle is not, by its nature, used for personal reasons, it may qualify for the full deduction, which in 2012 is $139,000. For instance, a multi-passenger van, such as an airport shuttle, would qualify. A pickup with a full-sized cargo bed, capable of holding an item at least six feet in length, may also qualify.
The vehicle can be either used or new, and can be financed or purchased outright. It must be used at least 50 percent of the time for business. Vehicles used less than 100 percent of the time for business have reduced depreciation limits.
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