Maximize Your 2024 Tax Deductions by Investing in a Business Vehicle Before Year-End

Posted on October 15, 2024.

Are you looking to reduce your tax liability for 2024? If you also need a new business vehicle, this strategy could help you accomplish both goals. Here’s how you can secure valuable tax deductions by acquiring and placing a vehicle into service by December 31, 2024.

Step 1: Meet the “Placed in Service” Requirement

To qualify for tax deductions in 2024, you must place your new vehicle in service by year-end. This means you need to both own and drive the vehicle for at least one business mile before December 31, 2024. With this requirement met, you’re set to take advantage of significant tax deductions.

Option 1: Buy a New or Used SUV, Crossover, or Van

If you or your corporation buys a new or used SUV, crossover, or van classified as a truck with a gross vehicle weight rating (GVWR) of at least 6,001 pounds by December 31, you can benefit from:

1. 60% bonus depreciation
2. Section 179 expensing of up to $30,500
3. MACRS depreciation using the five-year table
4. No luxury depreciation limits

Example: Let’s say you buy a heavy SUV for $100,000, used 90% for business. Your deductions for 2024 might look like this:

• $30,500 Section 179 expense
• $35,700 bonus depreciation
• $4,760 in MACRS depreciation

In total, your 2024 write-off on this $90,000 business-use SUV could be as high as $70,960.

Option 2: Buy a New or Used Pickup Truck

If a pickup truck fits your business needs, buying one by December 31, 2024, can yield these benefits:

1. 60% bonus depreciation
2. Section 179 expensing of up to $1,220,000
3. MACRS depreciation with a five-year schedule
4. No luxury depreciation limits

For full Section 179 expensing, your pickup truck must have:

• A GVWR over 6,000 pounds
• A cargo area of at least six feet in length that’s separate from the passenger compartment

Example: If you purchase a $55,000 qualifying pickup truck and use it 91% for business, you can expense the full business-use cost, totaling $50,050.

If your pickup has a shorter bed, it’s treated as an SUV for tax purposes. You’d still benefit from up to $30,500 in expensing and 60% bonus depreciation.

Option 3: Buy an Electric Vehicle (EV)

For an environmentally friendly option, consider an all-electric or plug-in hybrid vehicle. Depending on the model, you may qualify for a federal tax credit of up to $7,500. This credit is applied first, followed by the applicable depreciation rules for your specific vehicle.

Need Help with Your Vehicle Purchase and Tax Strategy?

If you’re ready to secure these tax benefits and need guidance on the best approach for your business, give us a call. We’ll help you maximize your deductions and keep your business finances running smoothly into the new tax year.