Buying a new or used passenger auto for your business can lead to tax breaks. If bonus depreciation is claimed, the first-year depreciation cap is $18,100 for vehicles bought after September 27, 2017, and put in use this year.

The second-and third-year caps are $16,100 and $9,700. After that…$5,760. If no bonus depreciation is taken, the first-year regular depreciation ceiling ends up falling sharply to $10,100.

Buyers of heavy SUVs used solely for business can write off the full cost, thanks to bonus depreciation. SUVs used solely must have a gross weight rating over 6,000 pounds. Up to 100% of the cost of a big pickup truck can be expensed.

As noted above, total amounts expensed can’t exceed the business’s taxable income.

Small Business Tax Strategies
December 2020