2019 Tax Code 179 Vehicle Guide For Self-Employed & Business Owners


2019 Tax Code 179 - Vehicle Guide for Self-Employed & Business Owners

**BE SURE TO CHECK BACK WEEKLY- WE ARE DISCOVERING NEW VEHICLES FOR THE LIST**

As promised, below is our annual guide to Tax Code Section 179 for self-employed and business owners who buy a vehicle. This guide encompasses qualifying vehicles purchased in the 2019 calendar year.

Tax Code 179

Tax Code 179, the special deduction to write off equipment in the year purchased, was extended permanently in 2015 legislation. This has been further liberalized by the Tax Cuts and Jobs Act (TCJA) that Congress enacted in December 2017.

Beginning in 2018, this special deduction allows businesses to write off up to $1 million worth of depreciable assets in the year that they are purchased. This can include new and used machinery, heavy equipment, furniture and fixtures, and certain vehicles, mainly SUVs and pickup trucks.

There are certain limitations to the rule in addition to the $1 million cap. For example, if you purchase more than $2,500,000 in assets for the year, then you will have this deduction phased out. Also, you must have positive income and not a net loss for the year. However, if you meet these guidelines, then it can be a great idea to move those vehicle purchases you are planning for next year forward to 2019 to take advantage of last-minute tax savings. You must purchase the vehicle by December 31, 2019 to get the write-off on your 2019 taxes.

Bonus Depreciation

Another great tax break, Bonus Depreciation, has been made even better by the TCJA. Bonus Depreciation allows you to deduct a specified percentage of the cost of assets in the year of purchase. This deduction is allowed even if you do NOT have income and has no max amount. You can use this for an unlimited number of purchases. The percentage is doubled to 100% for assets purchased after September 27, 2017. For assets purchased after this date, the $25,000 cap which applies to SUVs and crossovers with a Gross Weight above 6,000 lbs. utilizing Section 179 does not apply to those vehicles utilizing Bonus Depreciation. Assets eligible for Bonus Depreciation now include used assets. The Bonus Depreciation percentage of 100% is temporary and is scheduled to be phased down beginning in 2023.

Limitations

Keep in mind that vehicles are subject to limitations on any of the depreciation deductions. The vehicle must be used at least 50% for business to qualify. Also, there are top end deductions for different classes of vehicles. For example, small cars under 6,000 lbs., Luxury autos, are capped at $18,000 of depreciation in the first year, $10,000 if bonus deprecation is not taken due to luxury auto limitations, the IRS has imposed to help discourage the depreciation of high value vehicles. SUVs and crossovers with Gross Weight above 6,000 lbs. are capped at $25,000 if Section 179 is taken. SUVs and crossovers with Gross Weight above 6,000 lbs. do not have a cap if Bonus Depreciation is taken. Pickups and vans with no rear passenger seating that are above 6,000 lbs. also do not have a cap. Every major brand of pickup (1/2 ton and up) are over 6,000-pounds for purposes of this deduction. This includes Ford, Ram, Chevrolet, Toyota, GMC, and Nissan. When you get down to the mid-sized trucks you might be surprised to find that some of these are right on the line. A 2018 Chevrolet Colorado crew cab is over the weight limit, but the extended cab is not, so it might save enough in taxes to make it worthwhile to upgrade to the bigger size. If Section 179 or Bonus depreciation is used standard mileage rates cannot be used for any periods after the year deprecation is taken and actual auto expenses (fuel, tires, repairs, etc.) must be tracked going forward.

Mileage

Another great automobile deduction that is often overlooked is the mileage deduction. This is a unique deduction because it does not matter how much you actually spend but matters how much you drive. This is the deduction you use if you are not depreciating the cost of your vehicle. This would be used when mileage is a better deduction than depreciation, or when depreciation is not allowed (for example, if you used your vehicle less than 50% for business).

The mileage rate is increasing from the 2018 tax year amount of 54.5 cents per mile, up to 58 cents per mile for the 2019 tax year. The calculation is as simple as it sounds: if you drove 10,000 miles for business purposes, then you get a mileage expense of $5,800.

This deduction is much easier than keeping track of your expenses for gasoline, oil changes, tire replacement, etc. Keep in mind, however, that you cannot double dip and use the mileage deduction in addition to expensing your gasoline, oil changes, tire replacement, etc or. In addition, if Section 179 or Bonus depreciation is used standard mileage rates cannot be used for any periods after the year deprecation is taken and actual auto expenses (fuel, tires, repairs, etc.) must be tracked going forward.

Which Vehicles Qualify

Here is a quick reference to some vehicles that are over 6,000-pounds GVWR. There may be others not listed here, and I also highly recommend you look on the inside of the driverís door to verify the Gross Vehicle Weight Rating, sometimes equipment and options push a vehicle over the limit to qualify, and conversely a lack of options can keep a vehicle from qualifying, so do your homework!

In alphabetical order by brand:

Audi
  • AUDI Q7 3.0L TDI
BMW
  • BMW X5 M
  • BMW X5 XDRIVE35I
  • BMW X6 M
  • BMW X6 XDRIVE35I
Buick
  • BUICK ENCLAVE 2WD
  • BUICK ENCLAVE 4WD
Cadillac
  • CADILLAC ESCALADE 2WD
  • CADILLAC ESCALADE AWD
  • CADILLAC ESCALADE HYBRID
  • CADILLAC XT5
  • CADILLAC XT6
Chevrolet
  • SILVERADO C1500
  • SILVERADO C1500
  • SILVERADO C2500
  • SILVERADO C3500
  • SILVERADO K1500
  • SILVERADO K1500
  • SILVERADO K2500
  • SILVERADO K3500
  • SUBURBAN C1500
  • SUBURBAN K1500
  • TAHOE 2WD LS
  • TAHOE 4WD LS
  • TAHOE HYBRID
  • TRAVERSE 2WD
  • TRAVERSE 4WD
Chrysler
  • Pacifica
  • Pacifica Hybrid
Dodge
  • DODGE DURANGO 2WD
  • DODGE DURANGO 4WD
  • DODGE GRAND CARAVAN
Ford
  • FORD EXPEDITION 2WD
  • FORD EXPEDITION 4WD
  • FORD EXPLORER 2WD
  • FORD EXPLORER 4WD
  • FORD F-150 and larger 2WD
  • FORD F-150 and larger 4WD
  • FORD FLEX AWD
GMC
  • GMC ACADIA 2WD
  • GMC ACADIA 4WD
  • GMC SIERRA C1500
  • GMC SIERRA C2500 HD
  • GMC SIERRA C3500 HD
  • GMC SIERRA C3500 HD
  • GMC SIERRA K1500
  • GMC SIERRA K2500 HD
  • GMC SIERRA K3500 HD
  • GMC YUKON 2WD
  • GMC YUKON 4WD
  • GMC YUKON HYBRID
  • GMC YUKON XL C1500
  • GMC YUKON XL K1500
Honda
  • PILOT 4WD
  • HONDA ODYSSEY
Infiniti
  • INFINITY QX80
  • INFINITY QX56
Jeep
  • JEEP GRAND CHEROKEE
Land Rover
  • RANGE ROVER 4WD
  • RANGE ROVER SPT
  • DISCOVERY
Lexus
  • LEXUS GX460
  • LEXUS LX570
Lincoln
  • LINCOLN MKT AWD
  • LINCOLN Navigator
Mercedes Benz
  • MERCEDES-BENZ G550
  • MERCEDES-BENZ G Class
  • MERCEDES-BENZ GL350 BLUETEC
  • MERCEDES-BENZ Metris & Sprinter
Nissan
  • NISSAN ARMADA 2WD
  • NISSAN ARMADA 4WD
  • NISSAN NV 1500 S V6
  • NISSAN NVP 3500 S V6
  • NISSAN TITAN 2WD S
Porsche
  • PORSCHE CAYENNE
Ram
  • RAM Promaster 1500-3500
  • RAM 1500 and up
Tesla
  • TESLA MODEL X
Toyota
  • TOYOTA 4RUNNER 2WD LTD
  • TOYOTA 4RUNNER 4WD LTD
  • TOYOTA LANDCRUISER
  • TOYOTA SEQUOIA 2WD LTD
  • TOYOTA SEQUOIA 4WD LTD
  • TOYOTA TUNDRA 2WD
  • TOYOTA TUNDRA 4WD
Volkswagen
  • VW TOUAREG HYBRID

While every effort was made to make sure this list was accurate, CarProUSA is not responsible for errors or omissions.

SPECIAL THANKS TO THE SHOW CPA BILL CATON OF CATON CONSULTING GROUP, a FFH Company, AND HIS STAFF FOR THEIR HELP DECIPHERING THIS COMPLICATED TAX CODE. https://www.ccgcpa.com
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Steven
Does anyone thought about getting the new 2020 Toyota Highlander Hybrid with combined 35 mpg? It's listed for GVWR 5960 - 6000 lbs, But no articles out there mentioned about it. I wondering if Highlander would qualified for the 179 deduction ?
The Car Pro
Steven, speak to one of my Toyota dealers, they can look on the door to verify the exact GVWR, itís always there.

Jerry Reynolds
Shan
I see conflicting reports of what Gross vehicle weight of Subaru ascent 2020 is. I see 6001 and 6000. What does the IRS use to verify this.
The Car Pro
They use the weight listed on the drivers door. 6000 is acceptable, so either way you are fine.

Jerry Reynolds
Adam From Albany, NY
Please help me figure out what truck/van to get my main employee!!!! I'm looking for a van/truck that i can deduct most of it if not all of it the first year. I'm reading if the vehicle is over 6,000 pounds then you can go up to $25,000 deduction the first year however my employee lives 50 mins away and would like something a little economical with gas mileage. I've read you don't have to buy new and can buy used and i think thats where im leaning to. Also i have read that if you get something under 6,000 pounds you can deduct up to $10,000. Is this the case? if so I might get a used chevy colorado with 50,000 miles or something. Also to consider is that my employee said if i get him a work vehicle that he will pay for gas so i can deduct the mileage. So i would like to take advantage this as well but you can't deduct mileage when depreciating a vehicle they said. Can i deduct mileage in 2021 after i depreciate it for 2020?

Thanks for helping, lots to consider... been researching this for 4 hours and can't seem to get straight in my head!!!!
The Car Pro
Adam, I would suggest talking to whomever does your taxes for your business. I try to give all the info I can with the help of a very good CPA, but there are a lot of moving parts with the IRS. I would want you to know with certainty, and would not want to tell you wrong.

I wish I could be of more assistance.

Jerry Reynolds
Ardith
Do you know if these deductions are available in 2020 as well?
The Car Pro
Hi Ardith! Yes,

Tax Code 179, the special deduction to write off equipment in the year purchased, was extended permanently in 2015 legislation. This has been further liberalized by the Tax Cuts and Jobs Act (TCJA) that Congress enacted in December 2017.

So qualifying vehicles purchased in 2020 can be written off for the 2020 tax year, like 2019 qualifying vehicles could be written off in 2019. They can written off in the year purchased.

Thanks for writing!
Jackie
I purchased a F250 on December 28, 2018 and began using it in my business on January 1, 2019. Can I take the 100% bonus depreciation on my 2019 taxes? I don't know if I have to purchase the vehicle AND put it in service in the same year to qualify... thank you
The Car Pro
Hi Jackie, we would recommend you speak to a tax professional for more information about Bonus Depreciation. We hope you've enjoyed your truck!
Angela
Does the Chevy blazer classify over 6000 pounds?
The Car Pro
With a gross vehicle weight of 6001 lbs. it should, but as Jerry advises, always look on the door jamb of the car where it is always stated so you can verify the Gross Vehicle Weight Rating. Sometimes equipment and options push a vehicle over the limit to qualify, and conversely a lack of options can keep a vehicle from qualifying, so doing your homework is key.
Ryan
Does the 2020 Jeep Gladiator Qualify?
The Car Pro
It appears some are just under the limit, while others are over. On the door pillar of every vehicle made it will give you the GVWR. Before purchasing a vehicle to claim Tax Code 179, be sure to look.

Good luck.

Jerry Reynolds
Rav
Does Mercedes GLS qualify since it is over 6000LBs.
The Car Pro
I can't find the GVWR at the Mercedes website, but the GLS 450 has a curb weight of over 5700 pounds, it should easily qualify. I have no hesitation telling you it's OK, but when you shop for one, have the dealer verify it. They'll have that info available.

Jerry Reynolds
Bryan H
GVWR of out 2018 GLS 450 is 7,165lbs
JoeComp
Does the car have to be purchased under company name .
My account tells me I can reset not get the text benefits if I buy it under company name but I rather not because of higher insurance. I was thinking of the Toyota Highlander but don't see it listed.
Thank you for you help
The Car Pro
No, the vehicle just has to be used for company use. Have your CPA check the rules under tac code 179.

Jerry Reynolds
dennis
The Chrysler Pacifica has a GVW of over 6,000lbs. Is there a reason or factor that keeps it off the list?
Many Thanks -Dennis
The Car Pro
Dennis, I just missed it and verified it qualifies. We stay to catch them all but it's a tremendous amount of research. We'll get it added. Thanks for letting me know.

Jerry Reynolds
JD
I'm surprised the Tesla Model X is not listed on your list. The Model X community is VERY familiar with the Section 179 deduction.
The Car Pro
We've added to the list - thanks for you email! - Amy
Armstrong
Does the model Y qualify?
The Car Pro
Vehicles that qualify must be be over 6,000-pounds GVWR.
Edward
What is the cap if the pickup truck has rear seating?
The Car Pro
Edward, I assume you mean the dollar amount of the write-off. There is essentially none, it goes up to one million dollars for qualifying people.

As always, it's a good idea to check with your tax advisor.

Jerry Reynolds
Richard Ponce, EA
Yes one can avail themselves of this provision of the tax code as long as the entity writing off the vehicles has sufficient income to be able to use it. Don't run in and buy a vehicle if you are not making any money. You will not be able to use this provision of the tax code.
The Car Pro
Thanks Richard. I agree and was careful to point out: Also, you must have positive income and not a net loss for the year.

Have a great Thanksgiving.

Jerry Reynolds