If you’re looking to reduce your 2014 tax bill, you may want to consider purchasing a business vehicle before year end. Business-related purchases of new or used vehicles may be eligible for Section 179 expensing, which allows you to expense, rather than depreciate over a period of years, some or all of the vehicle’s cost.
The normal Sec. 179 expensing limit generally applies to vehicles weighing more than 14,000 pounds. As of December 16th, the House and Congress have passed tax extenders to retroactively increase the Section 179 limits. It is expected that the President will approve. The Sec. 179 expensing limit is $25,000 for vehicles weighing more than 6,000 pounds but no more than 14,000 pounds. Vehicles weighing 6,000 pounds or less are generally subject to the passenger automobile limits.
Even when the normal Sec. 179 expensing limit is higher, a $25,000 limit applies to SUVs weighing more than 6,000 pounds but no more than 14,000 pounds. Vehicles weighing 6,000 pounds or less are subject to the passenger automobile limits. For 2014, the depreciation limit is $3,160.
Many additional rules and limits apply to these breaks. So if you’re considering a business vehicle purchase, contact us to learn what tax benefits you might enjoy if you make the purchase by Dec. 31.