Business vehicles that weigh more than 6,000 pounds can qualify for a 100 percent business tax deduction.
When businesses buy equipment, they get to take a depreciation tax deduction and write off the cost of the equipment over several years. Section 179 of the tax code allows a small business to take a 100 percent tax write off of qualifying equipment in the year it is purchased. One of the restrictions to write off vehicles under Section 179 is a 6,000 pound weight minimum.
SUV Tax Break
The Section 179 tax deduction became better known in 2003 when the write off limit was increased from $25,000 to $100,000 and business owners discovered they could buy large sport utility vehicles — SUVs — in their business name and write off the entire cost of the vehicle on their business taxes. The limitation was that qualifying vehicles must be above 6,000 pounds gross vehicle weight (GVW). The deduction amount for SUVs has been reduced; for 2010 the maximum first-year deduction for a new, large SUV is $25,000.
Section 179 for Business
A business can still take a full deduction for the purchase of vehicles that have a more functional business purpose. The basic limitations are the vehicle must have a GVW between 6,000 and 14,000 pounds. Trucks in this weight range are commonly known as 3/4-ton and 1-ton vehicles. In 2010, the maximum limit for the Section 179 deduction is $500,000 for all qualifying equipment. Trucks must be used for business at least 50 percent of the time and can be financed or leased.
Qualifying Truck Types
For a business planning to purchase new trucks, Section 179 allows a range of business use vehicles. The types of vehicles that qualify are heavy-duty pickup trucks with a bed at least 6 feet in length, cargo vans (except for the half-ton models) and passenger vehicles designed to carry nine passengers or more, such as shuttle buses.
The 2010 Jobs Act
The deduction limits for section 179 were scheduled to be limited to $250,000 in 2010 and only $25,000 in 2011. The Small Business Jobs Act passed in 2010 increased the limit to the $500,000 level. A business is limited to the purchase of $2 million of Section 179 qualifying equipment during the tax year to qualify for the full $500,000 deduction.