Section 179 Tax Deductions For Business Owners On Liberty Isuzu Trucks
In a nutshell, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy or lease a piece of qualifying equipment (such as an Isuzu Truck from Liberty Isuzu), you can deduct the full purchase price from your gross income. Basically, Section 179 is an incentive to encourage businesses to buy equipment and invest in themselves.
One of the more popular uses of the Section 179 Deduction has been for vehicles. In fact, the Section 179 deduction was sometimes referred to as the “Hummer Tax Loophole” because it allowed businesses to buy large SUV’s and write them off. While this particular use (or abuse) of the tax code has been modified with the limits explained below, Section 179 still can be very advantageous for buying and upfitting Isuzu Trucks for your business.
Limits of Section 179
Section 179 does come with limits, as there are caps to the total amount that can be written off ($1,050,000 for 2021), and limits to the total amount of the equipment purchased ($2,620,000 in 2021). The deduction begins to phase out on a dollar-for-dollar basis after $2,620,000 is spent by a given business, with the entire deduction being removed once $3,670,000 in purchases is reached.
As such, Section 179 is designed as an incentive for small and medium-sized businesses. The good news is that any small business that purchases, finances, and/or leases new or used qualifying equipment during tax year 2021 could qualify for the Section 179 Deduction (assuming they spend less than $3,670,000 in total).
Requirements for Claiming Section 179 Deductions on Isuzu Trucks, upfitting and other Vehicles
There are a few key factors that need to be considered when determining Section 179 qualifications. First and foremost, the vehicle must be used for business at least 50% of the time – and these depreciation limits are reduced by the corresponding percentage of personal use if the vehicle is used for business less than 100% of the time. Granted, Isuzu Trucks are designed for business use, so these exclusions may not apply towards your Isuzu Truck purchase, but it’s something to keep in mind.
In addition, the vehicle(s) you are purchasing must be titled in the company name. Simply titling the vehicle in the business owner’s name does not qualify for Section 179 deductions.
Regardless of whether you are purchasing/upfitting an Isuzu Truck or another type of vehicle, you must buy and put it into service between 1/1 and 12/31 of the calendar year you are claiming the write-off. “Placing the vehicle into service” means when the vehicle is ready and available – even if you’re not using it. Further, a vehicle first used for personal purposes doesn’t qualify in a later year if its purpose changes to business.
Both new and used Isuzu Trucks (and upfitting) from Liberty Isuzu qualify for Section 179 deductions. The vehicle must be “new to you,” but does not have to be a new vehicle itself.
What Business Vehicles Qualify for the full Section 179 Deduction?
Note that because many vehicles can function as both business and personal vehicles, the rules for business vehicle deductions are always evolving, and can be complicated. It’s easier to list the typical vehicles that will generally qualify for a full section 179 deduction, and then discuss the rules for other vehicles.
Many “work vehicles” such as Isuzu Trucks, by their nature, are not likely to be used for personal purposes, so they will typically always qualify for full Section 179 deduction. This includes the following vehicles:
- Vehicles that can seat nine-plus passengers behind the driver’s seat (i.e.: Hotel / Airport shuttle vans, etc.).
- Vehicles with: (1) a fully-enclosed driver’s compartment / cargo area, (2) no seating at all behind the driver’s seat, and (3) no body section protruding more than 30 inches ahead of the leading edge of the windshield. In other words, a classic cargo van.
- Heavy construction equipment will qualify for the Section 179 deduction, as will forklifts and similar.
- Typical “over-the-road” Tractor Trailers will qualify.
Limits on Passenger Vehicles used for Business
For passenger vehicles, trucks, and vans (not meeting the guidelines below), that are used more than 50% in a qualified business use, the total deduction including both the Section 179 expense deduction as well as Bonus Depreciation is limited to $11,160 for cars and $11,560 for trucks and vans.
Exceptions include the following vehicles:
- Ambulance or hearses used specifically in your business
- Taxis, transport vans, and other vehicles used to specifically transport people or property for hire.
- Qualified non-personal use vehicles specifically modified for business (e.g. work van without seating behind driver, permanent shelving installed, and exterior painted with company’s name)
- Other heavy “non-SUV” vehicles and trucks with a cargo area at least six feet in interior length (this area must not be easily accessible from the passenger area.) To give an example, many pickups with full-sized cargo beds will qualify for a full deduction (although some “extended cab” pickups may have beds that are too small to qualify).
Limits for SUVs or Crossover Vehicles with GVW above 6,000lbs
Certain vehicles (with a gross vehicle weight rating above 6,000 lbs. but no more than 14,000 lbs.) qualify for deducting up to $25,000 if the vehicle is purchased and placed in service prior to December 31 and meets other conditions.
The Section 179 Deduction is a tax incentive that is easy to use, and gives businesses an incentive to invest in themselves by adding capital equipment – equipment that they use to improve their operations and further increase revenue. In short, taking advantage of the Section 179 Deduction will help your business add equipment – including new and used Isuzu Trucks and upfitting equipment – while allowing you to keep more of your tax dollars.
A Brief Caveat from Liberty Isuzu Trucks:
While we have put this guide together to help you navigate Section 179 deductions, Liberty Isuzu is not a professional tax advisor. Be sure to consult a licensed tax professional or the IRS for exact rules regarding Section 179 and how it relates to your Liberty Isuzu Truck and equipment purchase.