As a business owner, maximizing tax deductions is a key strategy for reducing your taxable income and increasing your bottom line. One of the valuable tax-saving opportunities available to businesses is the Section 179 deduction. This allows you to subtract the cost of machinery and other qualifying items, including vehicles! Vehicles must meet certain requirements in order to qualify for Section 179, however. Let’s take a look at the section 179 deduction vehicle list for 2023.
Checkout Some Electric Vehicles That May Qualify For Section 179 Tax Deduction!
Understanding Section 179
First, let’s quickly review what this deduction covers in general. Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment or property purchased or financed during the tax year. This deduction was designed to encourage small and medium-sized businesses to invest in their growth by providing an incentive for buying necessary assets.
In addition to certain vehicles, the following are eligible for a deduction under Section 179:
- Machinery and equipment needed for the business
- Software (not custom)
- Livestock
- Furniture
Section 179 does not generally cover real estate or intangible assets, like copyrights and licensing.
Qualifying Section 179 Vehicles
To qualify for the section 179 deduction, a vehicle must meet certain criteria set forth by the IRS:
- Eligible vehicles can be a passenger car, crossover SUVs, heavy SUVs, trucks, and vans
- The vehicle must be put to use for business within the first year of purchase
- The vehicle can be purchased new or used
- The vehicle must be used at least 50 percent of the time for business purposes*
*Keep in mind that, in order to claim the full deduction for your vehicle, it must be used 100 percent of the time for business. Otherwise, you will be eligible for only a partial deduction.
Section 179 Vehicle Categories
The IRS recognizes three categories of qualifying vehicles: Light, Heavy, and Other:
- Light Vehicle Section 179 Requirements
- Must have a gross vehicle weight rating (GVWR) of less than 6000 pounds. This includes most crossover SUVs and passenger vehicles.
For 2023, the maximum amount you can deduct for a light business vehicle is $12,200 in the first year the vehicle is used.
Model examples: Mercedes Benz EQB-Class, EQS-Class
Heavy Vehicle Section 179 Requirement
Heavy vehicles must be between 6,000 and 14,000 pounds. This would include most full-sized SUVs, cargo and passenger vans, and pickup trucks.
“Heavy” vehicles can deduct a maximum of $28,900 for 2023.
Model examples: Mercedes Benz Sprinter vans; EQS SUV
Other Section 179 Vehicles
- These are vehicles with a GVWR of more than 14,000 pounds or a vehicle that has been customized/modified for business use. Specific parameters include:
- Delivery vans that have an interior cargo area of at least six feet and that is not easily accessible by passengers.
- Shuttle vehicles that have more than nine passengers behind the driver
- Vehicles with a fully enclosed driver compartment and no seating behind the driver
This category would also include vehicles such as ambulances, hearses, and work trucks.
Generally, you can find your vehicle’s GVWR on the manufacturer’s label on the inside of the car door.
Is There a Limit to the Number of Vehicles You Can Deduct?
You can deduct as many vehicles as you want, up to a maximum of $1,080,000. In the case of a heavy vehicle, this means you could deduct up to 37 vehicles, provided each meets the other necessary criteria.
How to Claim the Deduction
To take advantage of the Section 179 deduction for qualifying vehicles, you’ll need to obtain Form 4562 and select the 179 deduction (Section 1). You will then list the properties (vehicles) for which you intend to apply the deduction. Make sure you maintain careful records of mileage, receipts, and other evidence of the vehicle’s stated business purpose.
Write Off a Mercedes Benz Sprinter for Your Business
Mercedes Benz Sprinter vans continue to be a top choice for businesses and van conversions alike. They are highly customizable, extremely comfortable to drive, and utilize a diesel engine that outlasts its gas competitors by decades. They also qualify as “heavy” vehicles by the IRS when used for business purposes at least 50 percent of the time.
If you are interested in purchasing a Sprinter or a fleet of these great vehicles for your business, visit the Mercedes Benz of Littleton dealership. We have a full line of new and pre-owned Sprinters ready for a test drive.
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