Section 179 Tax Write-offs for Business Vehicles

If you use a car or truck for business, you may be eligible for a Section 179 vehicles tax deduction on all or part of the purchase price.

To qualify, however, you must claim actual expenses associated with the vehicle instead of deducting your business mileage using the standard mileage rate. 

How the Section 179 deduction works

Vehicles used for income-producing purposes can use a Section 179 deduction in the year you purchase and place the car into service. With Section 179, you can claim the entire cost upfront instead of spreading depreciation across several years. 

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Benefits to Section 179 Vehicles Deductions for Small Businesses

• Create an immediate tax benefit 
• Improve your cash flow 
• Opportunity to upgrade business equipment

Deduction limit for 2025

The deduction limit for 2025 is $1,250,000, with a capital purchase limit of $3,130,000. However, the percentage of your deduction must match the percentage of business use for the equipment.

For example, if you use your car for business 80% of the time, you can only deduct 80% of the eligible Section 179 amount.

Additional savings from bonus depreciation

In addition to the Section 179 vehicle deduction, you may also qualify for bonus depreciation, set at 40% in 2025.

Bonus depreciation was introduced under the Tax Cuts and Jobs Act of 2017 and will be phased out gradually between 2023 and 2026. By 2026, the rate will drop to 20% before expiring.

What’s my vehicle tax write-off for 2025?

You can combine Section 179 and bonus depreciation to maximize your tax savings. Here’s an overview of key details and requirements:

• Deduction limit: Up to $1,250,000
• Bonus depreciation rate (2025): 40%
• Eligible equipment (vehicles): New and used
• SUVs and large trucks (over 6,000 lbs): $31,300
• Cars, light trucks & SUVs (under 6,000 lbs): $20,400 (estimate for 2025; final limits pending IRS release)
• Business use requirement: Must be used more than 50% for business purposes
• Deadline: December 31, 2025 (vehicle must be purchased and placed in service by this date)
• Documentation: Maintain records to support your deduction claim.

This combination can provide tax benefits, but as it is gradually phased out, plan ahead to get the full advantage.

Vehicles that are eligible for the section 179 deduction

Many vehicles qualify for section 179. The IRS doesn’t publish a complete list of eligible vehicles; instead, you must look at the published requirements to see which type of deduction your vehicle falls under. 

The IRS categorizes eligible vehicles by size:

• Light vehicles weigh under 6,000 pounds, including passenger cars, crossover SUVs, and small trucks. 
• The 179 deduction for vehicles over 6,000 lbs is considered a heavy vehicle. This typically includes pickup trucks, commercial vans, and larger SUVs. 
• For vehicles over 14,000 pounds, you can deduct 100% of the purchase price rather than being subject to the limitations assigned to IRS section 179 vehicles.

The deductions for luxury vehicles have not changed. They are classified by weight and subject to the same deduction limits.

Section 179 vehicle limitations

• The Section 179 deduction only applies in the year the vehicle is purchased and placed into service. 
• Your write-off amount is limited by how much you use it for business. 
• You must adjust your deduction amount based on the percentage of time the vehicle is used for business. 
• The total Section 179 deduction cannot exceed your business’s taxable income.

This last point means that you also have limitations regarding business income. You cannot buy a new car and qualify for the full deduction if you only make a few hundred dollars monthly. You need to earn at least as much as you spend.

However, you can carry over any unused deductions into future years. For instance, if you earn $6,000 per year and purchase a $10,000 vehicle, you could calculate your eligible discount and spread it out over the next few years.

How to calculate your Section 179 deduction

Here’s an example of how to calculate a vehicle deduction for Section 179. 

Say you purchased a sedan in 2024 that qualifies as a light vehicle. 

You use it for 20 hours a week as an Uber driver but use the same car for your personal errands for about 10 hours each week. That means you use the vehicle for business about 66% of the time.

That means you can only write off 66% of the $12,400 maximum deduction, a total of $8,184. 

Remember, that’s a deduction, not a tax credit. So you’re not reducing your tax bill but lowering your taxable income by that amount. 

How to claim the section 179 write-off

To claim a Section 179 vehicle write-off, you must fill out IRS Form 4562. Part I pertains to Section 179 and gives you lines to list eligible properties placed in service for that tax year. 

In addition to the vehicle deduction limits, you also have a total Section 179 deduction limit for all types of depreciable assets. The maximum is $1,250,000 for 2025.

The IRS lists four elements of expenditures you must keep records of when taking a Section 179 deduction:

• Amount of expenses, such as acquisition costs, maintenance and repair, and lease payments.
• The amount of business use for the tax year.
• The date of purchase and use.
• The business purpose for the expense.