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Using Section 179 Tax Incentives on a New Vehicle

Posted at Tue, Dec 27, 2016 1:15 PM

Using Section 179 Tax Incentives on a New Vehicle

Small business owners, ranchers, and farmers in Bismarck should take advantage of section 179 tax incentives to get their company equipment and vehicles it needs for the year ahead.

This year's deadline - December 31, 2016 - is almost here, but there's still a bit of time if you haven't thought about what you can do with a Section 179 tax benefit in 2016.

Section 179 Tax Benefits

With this tax deduction, you could write off the entire expense of a business vehicle purchased in 2016.

Section 179 allows small businesses to deduct the full purchase price of qualifying vehicles or equipment purchased or leased during the tax year.

These breaks are designed to help fund a new company Ram, or whatever new vehicle you might need.

Familiarize yourself with the fine print of Section 179 to make sure you qualify.

How to Make the Most of Section 179

Here's a look at key Section 179 provisions for small business owners in North Dakota:

  • To qualify for Section 179, the vehicle in question must be used for business at least 50% of the time.
  • Qualifying vehicles must meet one of these requirements:
    • Heavy “non-SUV” vehicles with a cargo area at least six feet in interior length (this area must not be easily accessible from the passenger area.) To give an example, many pickups with full-sized cargo beds will qualify (although some "extended cab" pickups may have beds that are too small to qualify).
    • Vehicles that can seat nine-plus passengers behind the driver's seat (i.e.: Hotel / Airport shuttle vans, etc.).
    • Vehicles with: (1) a fully-enclosed driver's compartment / cargo area, (2) no seating at all behind the driver's seat, and (3) no body section protruding more than 30 inches ahead of the leading edge of the windshield. In other words, a classic cargo van.
  • For 2016, the maximum amount that can be written off is $500,000.
  • Total amount purchased is limited to $2,000,000. The deduction begins to phase out dollar-for-dollar after $2,000,000 is spent by a given business, making it a true small and medium-sized business deduction.
  • Qualifying vehicles for Section 179 can be either new or used.
  • They can also be either purchased or leased.
  • Qualifying new vehicle purchases also may qualify for Bonus Depreciation. Bonus Depreciation is being phased out, reducing in amount refunded each year so take advantage in 2016 while it's still 50%!
  • You can only claim Section 179 in the tax year that the vehicle was placed in service.
  • You can't claim Section 179 on a vehicle you purchased for personal use in a previous year, even if you change its purpose to business later.

Have more questions about what qualifies? Read all about vehicles that qualify for section 179 leases and purchases.

2016 section 179 deduction example

Ready to Utilize Section 179 Tax Deductions on Trucks for Your Bismarck Business?

If you need new business vehicles, take advantage of the Section 179 tax deduction before December is gone - or bookmark this page for next year.

More tax questions? Contact your financial expert. For questions about our inventory, our Eide Chrysler staff is ready to clear things up. Ask for our commercial and fleet expert, Tom Rehborg.

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*Please note: This information is provided by Eide Chrysler as a public service to you. It should not be construed in any way as tax advice or a promise of potential tax savings or reduced tax liability. Individual tax situations may vary. Federal rules and tax guidelines are subject to change. For more information about the Section 179 tax code and tax deductions, please contact your tax professional for complete rules applicable to your transactions and visit the Internal Revenue Service website at www.irs.gov.

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