The end of the year is fast approaching, and now is the perfect time to assess your tax strategy. If you’re looking to reduce your 2024 tax liability and need a business vehicle, you can achieve both goals by purchasing and placing the vehicle into service before December 31, 2024. Here's how you can take advantage of this opportunity.

Why Act Now?

To qualify for significant tax deductions, you need to ensure that your vehicle is both purchased and placed in service by the year’s end. This means you must own the vehicle and drive it at least one business mile before December 31, 2024. Acting promptly ensures you meet the “placed in service” requirement, unlocking major tax benefits.

Tax Deduction Opportunities

1. Purchase an SUV, Crossover, or Van

If you buy and place in service a new or used SUV, crossover vehicle, or van with a gross vehicle weight rating (GVWR) of 6,001 pounds or more, you can enjoy the following deductions:

• Bonus Depreciation: Deduct 60% of the vehicle’s cost.

• Section 179 Expensing: Deduct up to $30,500 of the vehicle’s cost.

• MACRS Depreciation: Use the five-year depreciation table.

• Avoid Luxury Limits: Luxury vehicle depreciation caps won’t apply.

Example:
You purchase a $100,000 heavy SUV, using it 90% for business. Here’s how your tax write-off could look:

• $30,500 (Section 179 expensing)

• $35,700 (Bonus depreciation)

• $4,760 (MACRS depreciation or $1,190 if the mid-quarter convention applies)

Total 2024 Deduction: Up to $70,960 for 90% business use.

2. Purchase a Pickup Truck

If you buy a qualifying new or used pickup truck with a GVWR of more than 6,000 pounds and a cargo bed at least six feet long (not accessible from the passenger compartment), you gain these benefits:

• Bonus Depreciation: Deduct 60% of the cost.

• Section 179 Expensing: Deduct up to $1,220,000 of the cost.

• MACRS Depreciation: Use the five-year depreciation table.

• No Luxury Limits: Avoid vehicle depreciation caps.

Example:
You purchase a $55,000 qualifying pickup truck, using it 91% for business. You can deduct $50,050 ($55,000 x 91%) under Section 179 expensing.

Short Bed Trucks: If the cargo bed is shorter than six feet but meets the GVWR requirement, the truck qualifies as an SUV for tax purposes. In this case, you can still deduct up to $30,500 under Section 179 and take 60% bonus depreciation.

3. Buy an Electric Vehicle (EV)

If you opt for an all-electric or plug-in hybrid vehicle, you may qualify for a tax credit of up to $7,500. The credit is applied first, after which standard vehicle deduction rules apply based on the type of EV purchased.

Don’t Miss This Opportunity!!!

If you’re considering buying a business vehicle, now is the time to act. These tax-saving strategies can significantly reduce your liability while allowing you to reinvest in your business.  

For personalized advice, feel free to reach out directly at Mid America Tax Planners - Contact Us.