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The 2023 tax season is right around the corner, and there are some great deductions and credits available for businesses purchasing vehicles this year. At Dave Smith Motors, we want to help you maximize your tax savings when you invest in quality commercial trucks, vans or fleet vehicles for your company.
With the right strategy, you can potentially reduce your 2023 business taxes significantly while also getting the new vehicles you need. Read on to learn more about the key opportunities this tax season.
Section 179 Deduction
Section 179 of the federal tax code allows businesses to fully deduct the purchase price of qualifying vehicles in the current tax year. For 2023, the Section 179 deduction limit is $1,080,000, meaning you can potentially write off that entire amount.
There are a few requirements to qualify for the Section 179 deduction:
- The vehicle must be used for business purposes (not personal use)
- Your business must purchase (not lease) the vehicle new or used
- The vehicle's gross weight rating must exceed 6,000 pounds
Many of the commercial trucks, vans and fleet vehicles in our inventory meet the gross vehicle weight requirement for Section 179. Our team can help determine which vehicles are eligible.
First-Year Bonus Depreciation
Businesses that don't qualify for the full Section 179 deduction can take advantage of first-year bonus depreciation. This allows you to deduct a large percentage of a vehicle's cost in the first year you place it in service.
The bonus depreciation percentage for 2023 is 80%. So if you purchase a $50,000 truck, you could deduct $40,000 right away and depreciate the remaining $10,000 over the tax life of the vehicle.
Bonus depreciation has fewer limits compared to Section 179. The vehicle only needs to be new to qualify - used vehicles don't apply for this deduction.
SUV Tax Loophole
Many business owners don't realize SUVs are treated more favorably than passenger cars under the tax code. Sport utility vehicles with a gross vehicle weight rating over 6,000 lbs essentially qualify for both Section 179 and bonus depreciation.
That means you can fully deduct up to $1.16 million on the purchase of a qualifying SUV. Several SUVs in our inventory exceed the 6,000 lb threshold to take advantage of this tax loophole.
Electric Vehicle Tax Credit
Going green with an electric vehicle can really pay off this tax season. Businesses that purchase a qualifying new all-electric or plug-in hybrid vehicle may receive a federal tax credit up to $7,500.
This credit will expire soon, so act now if you want to reap the benefits. Our EV experts can guide you on models that currently qualify for the maximum $7,500 credit.
Putting It All Together
Start by reading more at https://www.irs.gov/ or contact your accountant. With the right planning, you can leverage these deductions and credits together for huge tax savings:
- Purchase a qualifying new SUV over 6,000 lbs
- Deduct up to $1.08 million with Section 179
- Take 80% bonus depreciation on any remaining cost
- Also qualify for the $7,500 EV credit if electric
Our tax savings specialists can run the numbers and structure the purchase to optimize your 2023 tax situation. Act soon to maximize the return on your investment in new business vehicles.
With low interest rates still available, now is the time to equip your business for success. Learn more about all the deductions and credits available this tax season by contacting Dave Smith Motors today.
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