Does My Vehicle Qualify for Section 179 Deduction?

Buying a car is a huge expense, and the cost of maintenance and parking is even greater. The entire expenditure can burn quite a hole in your wallet. However, the good news is that Section 179 of the IRS allows you to deduct the cost of certain types of property on your income taxes as a business expense.

As a self-employed worker, freelancer, independent contractor you can claim tax deductions for your driving expenses that can substantially lower your taxes. If you own a car and use it for business purposes, you can deduct mileage and car-related expenses as a business deduction. Aside from claiming the mileage and maintenance tax deduction, you can also deduct your vehicle costs with Section 179.

What vehicles are covered by Section 179?

Section 179 was introduced as a federal incentive for small and midsize businesses, it includes vehicles that meet certain requirements, such as:-

  • Pickups and vans that are used for business more than 50% of the time and exceed 6,000 pounds gross vehicle weight. These vehicles may qualify for at least a partial Section 179 deduction, plus bonus depreciation.
  • Vehicles that are used for work and cannot double as personal vehicles, such as forklifts or trailers, or those that seat more than nine passengers behind the driver’s seat such as hotel or airport shuttle vans.
  • Delivery-type vehicles, such as cargo vans or box trucks with no passenger seating.
  • Specialty work vehicles such as hearses or ambulances.

Section 179 deduction vehicle list for 2022

  • Audi Q7
  • BMW X5, X6
  • Buick Enclave
  • Cadillac XT5, XT6, Escalade
  • Chevrolet Silverado, Suburban, Tahoe, Traverse
  • Chrysler Pacifica
  • Dodge Durango, Grand Caravan
  • Ford Expedition, Explorer, F-150, and larger
  • GMC Acadia, Sierra, Yukon
  • Honda Pilot 4WD, Odyssey
  • Infiniti QX80, QX56
  • Jeep Grand Cherokee
  • Land Rover Range Rover, Discovery
  • Lexus GX460, LX570
  • Lincoln MKT AWD, Navigator
  • Mercedes-Benz G550, GLS, GLE, Metris, Sprinter
  • Nissan Armada, NV 1500, NVP 3500, Titan
  • Porsche Cayenne
  • Tesla Model X
  • Toyota 4Runner, Landcruiser, Sequoia, Tundra

Are there any changes made to the Section 179 deduction in 2022?

  • Deduction limit: $1,080,000
  • Spending cap on equipment purchases: $2,700,000
  • Bonus depreciation: 100% for 2022

There are caps to the total amount written off ($1,080,000 for 2022), and limits to the total amount of the equipment purchased ($2,700,000 in 2022). The deduction begins to phase out on a dollar-for-dollar basis after $2,700,000 is spent by a given business (thus, the entire deduction goes away once $3,780,000 in purchases is reached), so this makes it a true small and medium-sized business deduction.

How does depreciation work under Section 179?

Depreciation refers to the annual deduction authorized to recover the cost or other basis of business or investment property having a useful life substantially beyond the tax year. Generally, depreciation starts when you first use the property in your business or for the production of income. It ends when you take the property out of service, deduct all your depreciable cost or other bases, or no longer use the property in your business or for the production of income.

However, with the Section 179 deduction, you can write off the entire cost of the purchase in the first year, rather than depreciating it over its functional life.

Where to report Section 179 deduction?

As a business owner, gig worker, or self-employed person, you must use Form 4562 to report your Section 179 deductions.

Standard Mileage vs Section 179 deduction

If you drive around a lot for work, then you have two options for deducting your vehicle expenses- the standard mileage deduction or Section 179 deduction.

The IRS claims that you can deduct the average costs of operating your vehicle as well as depreciation when choosing the standard mileage rate. In 2022, the standard mileage deduction rate increased to 58.5 cents per mile.

The table below shows the IRS mileage rate for 2022


IRS Mileage Rate 2022

Business mileage rate

58.5 cents/mile

Medical and moving mileage rate

18 cents/mile

Charitable mileage rate

14 cents/mile

For the most part, the standard mileage deduction is very popular, but it’s not always the best solution. In fact, you might be better off choosing another method.

If you purchased a new car, Section 179 may give you a larger deduction. For example, the first-year depreciation basis for a $60,000 new car placed in service during 2021 and used 100% for business would be $60,000.

This would result in a depreciation deduction of $3,160. With the election of the special depreciation allowance, this amount increases to $11,160 for the yea

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FlyFin CPA Team

With a combined 150 years of experience, FlyFin's CPA tax team includes tax CPAs, IRS Enrolled Agents and other tax professionals, offering users the most comprehensive tax advice and preparation.