You can generally write off vehicles used for business purposes, but the specific rules depend on how the car is used and its weight. The most common methods are the standard mileage rate (a set rate per business mile) or actual expenses (deducting a percentage of your actual costs like gas, insurance, and depreciation). For 2023, the standard mileage rate is 65.5 cents per business mile. However, vehicles over 6,000 pounds Gross Vehicle Weight Rating (GVWR)—like large SUVs and trucks—can qualify for more substantial deductions under Section 179 and bonus depreciation.
Qualifying for a Business Deduction
The fundamental rule from the IRS is that the vehicle must be used "more than 50%" for qualified business activities. Commuting from your home to your main workplace doesn't count. Qualifying use includes visiting clients, traveling between job sites, or making deliveries. You'll need to maintain a detailed mileage log to substantiate your claim, noting the date, destination, purpose, and odometer readings for every trip.
Deduction Methods: Standard vs. Actual
- Standard Mileage Rate: This is simpler. You just multiply your total business miles by the IRS-set rate. It covers all vehicle costs except interest on a car loan.
- Actual Expense Method: You track all costs—gas, oil, repairs, tires, insurance, registration, loan interest, and depreciation. Then, you deduct the percentage that corresponds to your business use. This method often yields a larger deduction if you have high expenses or drive a newer, expensive vehicle, but requires meticulous record-keeping.
Special Rules for Heavy Vehicles (Over 6,000 lbs GVWR)
This is a key area for business owners. Passenger vehicles under 6,000 lbs have annual depreciation limits. However, SUVs, trucks, and vans over 6,000 lbs GVWR classified as "non-personal use" vehicles can be fully expensed in the first year under Section 179, subject to certain limits. This makes them highly advantageous for tax purposes.
| Vehicle Type | Example Models | GVWR | Typical Business Use % | Key Deduction Consideration |
|---|
| Sedan/Mid-size SUV | Toyota Camry, Honda CR-V | Under 6,000 lbs | 60-80% | Subject to annual depreciation caps; standard mileage rate is often optimal. |
| Large SUV (Section 179 Eligible) | Chevrolet Suburban, Ford Expedition | Over 6,000 lbs | 90-100% | Potential for large first-year deduction via Section 179 expensing. |
| Pickup Truck (Bed Length > 6 ft) | Ford F-150, Ram 1500 | Often over 6,000 lbs | 95-100% | Often qualifies for favorable depreciation rules even if under 6,000 lbs. |
| Cargo Van | Ford Transit, Mercedes-Benz Sprinter | Over 6,000 lbs | 100% | Prime candidate for maximum Section 179 and bonus depreciation deductions. |
| Hybrid/Electric Vehicle | Tesla Model Y, Ford F-150 Lightning | Varies | 70-90% | Eligible for credits and deductions; electricity costs are deductible as an actual expense. |
Record-Keeping is Non-Negotiable
Regardless of the vehicle or method, you must have impeccable records. An IRS audit will require proof of both business use percentage and expenses. Use a dedicated app or a notebook in your glove compartment to track mileage from day one.
