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Section 179 Deduction for Vehicles in Georgia

Section 179 of the Internal Revenue Service (IRS) Tax Code allows businesses to benefit from tax write-offs when financing such purchases. You could possibly diminish your tax liability by a substantial amount.

This article will assist you in determining if your truck, SUV, or other vehicle qualifies for the 2023 Section 179 list. It will also clarify the deduction and depreciation limits for vehicles under Section 179, providing an example to guide you in calculating the deduction.

What Is Section 179 Deduction for Vehicles?

Section 179 is a part of the U.S. tax code that enables businesses to deduct from tax returns the entire purchase price of qualified depreciated assets in the year of purchase or financing (up to a specific limit).

If you purchase a new vehicle in 2023 and start using it immediately, you could deduct the entire cost from your business's taxable income when filing taxes in 2024. It's important to note that the full purchase price qualifies for the deduction, even though the vehicle will continue to be valuable in the coming years.

Suppose your business secures $50,000 in auto financing in 2023. In this case, you may be able to deduct $50,000 from your taxable income as of January 2024. Thus, your business will benefit from reduced tax liability in the current tax year instead of spreading the deduction over future tax years through asset capitalization and depreciation. This benefits:

  • Saving money for business expansion
  • Buying vehicles and equipment you need today

Eligibility Criteria for Section 179 Deduction

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  • Tangibility: They must be physical properties. Intangible assets are not eligible, e.g., copyrights and patents. Note that land and buildings do not meet the criteria for Section 179 but some systems attached to them do.
  • Ownership: The asset must be purchased, and leased property doesn't qualify
  • Business Use: The asset should be used in more than 50% of your business. If it's mainly for personal use and only occasionally used for business, it doesn't qualify.
  • Source: The asset cannot be acquired from a related party. As such, inheritance and gifts from parents, spouses, siblings, grandparents, and kids, as well as donations from charities and trusts, are not eligible.

Whether new or used, a business asset qualifies as long as it hasn't been owned by you before. Whether you buy it outright or lease/finance it, you can still qualify for the tax deduction.

Vehicles That Qualify for Section 179 Deduction

The IRS categorizes vehicles eligible for the Section Tax 179 deduction into three main groups namely Heavy, Light, and Other. The deduction permissible for each group can vary, and the IRS may adjust it annually to accommodate inflation.

Heavy Category

This pertains to any vehicle with a gross vehicle weight rating GVWR ranging from 6,000 pounds to 14,000 pounds. Various pickup trucks, full-size SUVs, and commercial vans fall under this segment.

Light Category

These have a manufacturer's GVWR below 6,000 pounds. Examples are passenger cars, small utility trucks, and crossover SUVs.

Other Category

This category is for vehicles weighing more than 14,000 pounds or those that have been modified for nonpersonal use.

  • Shuttle vehicles are designed to accommodate more than nine passengers behind the driver.
  • Delivery vans feature a cargo area with a minimum interior length of six feet that is not easily accessible from the passenger section.
  • Vehicles featuring an in-built enclosure at the driver's compartment and load-carrying device. There must be no seats behind the driver, and no part of the body must extend beyond the windshield by more than 30 inches.

If your business has one of these vehicles, it qualifies for Section 179 tax write-off:

  • Cargo vans and box trucks used for delivery
  • Work vehicles that are not personal, e.g., farm tractors, dump trucks, and backhoes
  • Specialty vehicles, e.g., ambulance and hearse
  • Heavy-duty vehicles, e.g., vans, pickups, and large SUVs

For the qualifying models exceeding 6,000 pounds, eligibility is based on the gross vehicle weight and the stated application.

The following is a sample list of the qualified Ford models:

  • Ford F-150 (6.5-foot or 8-foot bed, specific models)
  • Ford F-150 Lightning
  • Ford F-150 Raptor
  • Ford F-250 Super Duty
  • Ford F-350 Super Duty
  • Ford F-450 Super Duty
  • Ford F-550 Super Duty
  • Ford Expedition / Expedition MAX
  • Ford Transit Cargo Van
  • Ford Transit Passenger Wagon

Click to browse these new and/or used vehicles.

Both new and used vehicles are eligible for a Section 179 deduction. It's important to note that the used vehicle must be considered 'new to you' to qualify.

Section 179 Tax Deduction Calculation

To calculate the cost of a vehicle after tax, you need to get the sum of the first year:

  • Standard Depreciation + Tax Deduction + Bonus Depreciation = Total First-Year Deduction.

Also, find out your cash savings through this formula:

  • Total Purchase Price of the Vehicle x Local Tax Rate = Cash Savings

Then, from the overall first-year deduction, deduct the cash savings to get the vehicle cost after tax, i.e.

  • Total First-Year Deduction - Cash Savings = Cost of Vehicle

Almost every business needs a vehicle that is prone to depreciation. Instead of deducting the value of your vehicle purchases over several years, you can take the whole depreciation and deduct it in one year.

For any further questions, reach out to the Georgia Department of Revenue at 404-417-2100 or contact us. Take full advantage and explore our range of vehicles tailored to meet your business needs!

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3800 Highway 78, Snellville, GA, 30039
Five Star Ford Stone Mountain 33.840942, -084.061975.