Ultimate List of Section 179 Approved Vehicles for Tax Deduction

Section 179 is a special deduction that allows you to write off any equipment in the year it has been purchased. This tax code was permanently extended in the 2015 legislation.

What Is Section 179 Deduction?

The Section 179 deduction lets businesses to deduct the entire price or up to $500,000 from depreciable assets in the year that they have been bought. This includes office furniture and fixtures, software, machinery, heavy equipment and heavy vehicles such as trucks and SUVs mainly.

The most popular usage of Section 179 Deduction is for vehicles. In the past, Section 179 deduction was also referred to as the “Hummer Tax Loophole”, as, at the time, the deduction allowed businesses to purchase SUVs and then write them off. The tax code has been modified since then; however, the Section 179 deduction can still be beneficial for businesses while buying vehicles.

 

However, there are some limitations to the Section 179 apart from the $500,000 limit. For instance, if you buy assets worth more than $2,000,000 for the particular year, then this deduction will be phased out. And, your business should have a positive income and not a loss during the year. If you are able to meet these conditions, then it may be worth your while to move the vehicle purchases for next year to right now to benefit from the tax savings. However, the vehicle must be purchased by the 31^st of the year to get a write-off on the taxes for the particular year.

 

Usually, vehicles that are used in your business qualify for the Section 179 deduction; however, some passenger vehicles only have a total deduction limit of $11,160. Other vehicles, because of their nature, will not be used for personal purposes apart from some occasional usage. These vehicles qualify for a full deduction under Section 179. Whether the business vehicles are purchased, financed or leased, the deduction of all these vehicles remains the same.

 

How Does Section 179 Deduction Benefit Businesses?

• This deduction has been created in order to help businesses and by letting businesses deduct the entire amount of the cost of the equipment (to a certain limit), it is a great incentive for businesses to buy, lease or finance equipment.
• The deduction is valid on most types of general equipment used for business and also on off-the-shelf software (You can check the qualifying equipment here).
• The Section 179 deduction can help the bottom line of your business by lowering the amount you pay for the equipment, vehicles, etc.
• The Section 179 deduction is extremely simple to use. You just need to buy or lease the equipment or vehicle and use the IRS form. (You can check the details for the same here).

 

Bonus Depreciation

If your business does not qualify for the Section 179 deduction, you can take advantage of another tax break – bonus depreciation. This lets you deduct 50% of the cost of the assets in the year that it has been purchased. You can avail of this deduction even if you don’t have any income and there is no maximum amount. The bonus depreciation can be used for as many purchases as you want; however, you can use the deduction only for new assets. This deduction is not applicable for used vehicles, in which case Section 179 deduction is applicable. The bonus depreciation applicable slabs are:

• 2017 – 50%
• 2018 – 40%
• 2019 – 30%

 

Which Vehicles Qualify for the Full Section 179 Deduction?

Since vehicles can be used for both business, as well as personal purposes, the business vehicle deductions are changing at all times and can be quite complex. It is much easier to list down the vehicles that typically qualify for a full deduction under Section 179.

 

Many vehicles used for work because of their nature cannot be used for personal purposes and always qualify for full deduction under Section 179. The following vehicles fall under this category:

• Vehicles which can accommodate 9 or more passengers behind the driver’s seat such as airport shuttles, hotel vans, etc.
• Vehicles that have:
  • A completely enclosed driver compartment or cargo area.
  • No seating area behind the driver’s seat at all.
  • No section of the vehicle’s body protruding over 30 inches in front of the windshield’s leading edge i.e. a cargo van.
• Heavy construction equipment, forklifts and other similar equipment vehicles.
• Over-the-road tractor trailers

 

Limits on Passenger Vehicles Used for Business

For trucks, vans and passenger vehicles which are used more than 50% for qualified business purposes, the total deduction which includes both the Section 179 deduction and bonus depreciation is limited to $11,560 for vans and trucks and $11,160 for cars. The exception to this includes the following:

• Hearses and ambulances used specifically for your business.
• Transport vans, taxis and other vehicles that are specifically used to transport people or let out for hire.
• Non-personal use vehicles modified specifically for business such as a work van with permanent shelves installed, without any seating behind the driver and with the company’s name painted on the exterior.
• Any other non-SUV heavy vehicles and trucks having a cargo area which has at least 6 feet interior length which is not accessible easily from the passenger area. For instance, pickups with cargo beds that are full sized qualify for a full deduction under Section 179 (extended pick-ps with small-size beds do not qualify).

 

Limits for Crossover Vehicles or SUVs

For vehicles with a GVW (gross vehicle weight) rating of over 6,000 lbs, but not more than 14,000 lbs, qualify for a deduction of up to $25,000 in case the vehicle is bought and put into service before December 31^st and also meets other conditions.

 

Other factors to be considered:

• The vehicle can be either new or used; however, it must be purchased in an “arm’s-length” transaction that has been financed with qualified loans and leases and the title of the vehicle must be in the company’s name and not in the name of the company owner.
• At least for 50% of the time, the vehicle should be used for business purposes and if the vehicle is not used completely for business purposes, 100% of the time, then there is a reduction of depreciation limits by the corresponding percentage of personal usage.
• You can claim the Section 179 deduction only in the tax year in which that the vehicle has been put into service i.e. when the vehicle is ready and available, although you are not using the vehicle.
• Also, a vehicle that has been used for personal purposes first does not qualify for the Section 179 deduction if its purpose is changed to business use in a later year.

 

Section 179 Depreciation Deduction

The Section 179 deduction is applicable for vehicles that have a rating between 6,000 pounds GVWR and 14,000 pounds GVWR for up to $25,000 of the vehicle’s cost. The limitation on SUVs (sports utility vehicles) is not applicable to commuter vans, LCVs (large commercial vehicles) or buses.

 

Cars Vans and Light Trucks

Year 1 $3,160 $3,460

Year 2 $5,100 $5,500

Year 3 $3,050 $3,350

Year 4 and After $1,875 $1,975

 

List of Vehicles Eligible for Section 179 Deduction

Here is a list of vehicles with a gross loaded weight of over 6,000 lbs that qualify for the Section 179 Deduction. We have tried to make the list as exhaustive as possible; however, you can check the car manufacturer’s website to determine how much the vehicle weighs or you can look inside the driver’s door to verify the GVW rating of the vehicle.

 

• Audi Audit Q7 3.0T Premium
• Audi Q7 3.0L TDI
• BMW X5 M
• BMW X5 XDrive351
• BMW X6 M
• BMW X6 XDrive351
• Buick Enclave 2WD
• Buick Enclave 4WD
• Cadillac Escalade 2WD
• Cadillac Escalade 4WD
• Cadillac Escalade ESV
• Chevrolet Express 2500
• Chevrolet Express 3500
• Chevrolet Silverado C1500
• Chevrolet Silverado C2500
• Chevrolet Silverado C3500
• Chevrolet Silverado K1500
• Chevrolet Silverado K2500
• Chevrolet Silverado K3500
• Chevrolet Silverado 2500HD
• Chevrolet Silverado 3500HD
• Chevrolet Suburban C1500
• Chevrolet Suburban K1500
• Chevrolet Truck Tahoe 2WD LS
• Chevrolet Truck Tahoe 4WD LS
• Chevrolet Truck Tahoe Hybrid
• Chevrolet Truck Traverse 2WD
• Chevrolet Truck Traverse 4WD
• Chevrolet Truck Avalanche 2WD
• Chevrolet Truck Avalanche 4WD
• Dodge Grand Caravan
• Dodge Truck Durango 2WD
• Dodge Truck Durango 4WD
• Ford Truck Expedition 2WD
• Ford Truck Expedition 4WD
• Ford Expedition EL
• Ford Truck Explorer 2WD
• Ford Truck Explorer 4WD
• Ford Truck F-150 2WD
• Ford Truck F-150 4WD
• Ford Truck F-250
• Ford Truck F-350
• Ford Truck F-450
• Ford Truck Flex AWD
• GMC Acadia 2WD
• GMC Acadia 4WD
• GMC Savana C2500
• GMC Savana C3500
• GMC Sierra C1500
• GMC Sierra C2500 HD
• GMC Sierra C3500 HD
• GMC Sierra K1500
• GMC Sierra K2500 HD
• GMC Sierra K3500 HD
• GMC Yukon 2WD
• GMC Yukon 4WD
• GMC Yukon Hybrid
• GMC Yukon XL C1500
• GMC Yukon XL K1500
• Honda Odyssey
• Infiniti QX56
• Infiniti QX80
• Jeep Grand Cherokee
• Land Rover Range Rover 4WD
• Land Rover Range Rover SPT
• Land Rover LR4
• Land Rover Discovery
• Lexus LX570
• Lexus GX460
• Lincoln Navigator
• Lincoln Navigator L
• Lincoln MKT AWD
• Mercedes G550
• Mercedes GL500
• Mercedes Sprinter
• Mercedes Metris
• Mercedes Benz GL350 BlueTec
• Nissan Armada 2WD
• Nissan Armada 4WD
• Nissan NV Passenger
• Nissan NV 1500
• Nissan NV 2500
• Nissan NV 3500
• Nissan NV 1500 S V6
• Nissan NV 3500 S V6
• Nissan Titan 2WD S
• Porsche Cayenne
• Ram ProMaster 1500 Cargo
• Ram ProMaster 2500 Cargo
• Ram ProMaster 3500 Cargo
• Ram Ram 1500
• Ram Ram 2500
• Ram Ram 3500
• Tesla Model X
• Toyota 4Runner 2WD Ltd
• Toyota 4Runner 4WD Ltd
• Toyota Land Cruiser
• Toyota Sequoia 2WD
• Toyota Sequoia 4WD
• Toyota Tundra 2WD
• Toyota Tundra 4WD
• Volkswagen Touareg Hybrid