Heavy
Trucks, SUVS = Major Tax Savings
If you are considering buying or leasing a
vehicle for your business, you may be in for an
unexpectedly large tax benefit. As you may be aware, the
depreciation deduction for passenger vehicles is rather
skimpy, roughly $3,000 during the first year. The key here
is "passenger vehicle" and what the IRS does not consider
to be a passenger vehicle.
Any automobile with a gross vehicle weight rating (GVWR)
above 6,000 pounds that (1) is on a truck chassis or (2) is
classified as an SUV or minivan can potentially qualify and
is eligible to be depreciated much more quickly than a
regular passenger vehicle. In your business, this may be
most of the vehicles you are already using.
Let's say you buy a Chevy Tahoe SUV for $35,000 that you
use 100% in your business. (All vehicles we use are 100%
business use aren't they?) Because of the rather generous
depreciation rules and this often overlooked loophole,
generally your first year tax write-off would be
approximately $23,000. Depending on your tax bracket, the
Federal and State tax savings on this deduction alone could
be well over $7,000. Also, be sure that the dealer does not
charge the federal luxury auto tax on the sale. This does
not apply to vehicles with GVWR above 6,000 pounds.
The list of vehicles heavy enough to qualify for this is
surprisingly long and is regularly changing with new and
retooled models. In making your decision, always verify the
GVWR yourself; the label is usually found attached on the
inside of the driver's side door.
