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Using Section 179 Tax Deductions for Your Vehicle Purchase

Oct. 30 2024 News By Hudson Bus Sales

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Using Section 179 Tax Deductions for Your Vehicle Purchase

Section 179 of the IRS tax code is a great way for businesses to save money by deducting the full purchase price of qualifying equipment and vehicles from their taxable income. If your business is planning to buy or finance a bus—or other vehicles—in 2024, this guide will help you understand how to take full advantage of the Section 179 deduction.

What Is the Section 179 Deduction?

Section 179 allows businesses to deduct the full purchase price of qualifying equipment or vehicles used for business purposes. Instead of spreading deductions over several years (through depreciation), you can deduct the entire amount in the year the vehicle or equipment is purchased and put into service.

  • 2024 Deduction Limit: $1,220,000
  • Phase-Out Threshold: Begins phasing out after $3,050,000 in equipment purchases
  • Final Phase-Out Limit: The deduction is fully phased out at $4,270,000

Which Vehicles Qualify for Section 179?

The IRS divides vehicles into three categories based on weight, usage, and design. The deduction limits differ by category:

1. Light Vehicles (Under 6,000 lbs GVWR)

  • Includes: Passenger cars, crossover SUVs, and small trucks
  • 2024 Deduction Limit: $12,400
  • Bonus Depreciation: Add up to $8,000, for a total of $20,400 in the first year

2. Heavy Vehicles (6,000 – 14,000 lbs GVWR)

  • Includes: Full-size SUVs, commercial vans, and large pickup trucks
  • 2024 Deduction Limit: $30,500
  • Bonus Depreciation: 60% bonus depreciation available through 2024 (drops to 40% in 2025)

3. Specialty and Modified Vehicles (Over 14,000 lbs GVWR or Non-Personal Use Vehicles)

  • Includes: Shuttle buses, delivery vans, ambulances, work trucks, and hearses
  • 2024 Deduction: No limit—100% of the vehicle cost can be deducted
  • Requirements: Must be used primarily for business (over 50%) and put into service the same year

How Section 179 Benefits Your Business

By using Section 179, your business can:

  • Save on taxes: Reduce taxable income by deducting vehicle and equipment costs
  • Improve cash flow: Keep more of your money by avoiding multi-year depreciation
  • Encourage investment: Buy the equipment you need now, instead of waiting

This deduction also applies to pre-owned vehicles—as long as they are new to your business and primarily used for business purposes.

Section 179 Limitations

  • The deduction amount phases out dollar-for-dollar once purchases exceed $3,050,000 in a year.
  • If your business spends over $4,270,000 on equipment, the Section 179 deduction is no longer available.
  • Equipment and vehicles must be placed into service between January 1, 2024, and December 31, 2024, to qualify for this year's deduction.

Who Can Use the Section 179 Deduction?

Any business—whether small or large—that buys, finances, or leases new or used equipment for business use can use Section 179. This makes it an ideal tax incentive for small businesses looking to upgrade their vehicles or expand operations.

Maximize Your Savings in 2024

If you're thinking about purchasing a bus or other business vehicles, now is the time to act. Section 179 allows you to deduct most or all of the vehicle’s cost on your 2024 taxes, freeing up cash for other business needs.

Remember: The bus or vehicle must be used at least 50% for business and put into service the same year to qualify. Take advantage of this opportunity to grow your business and reduce your tax burden.

Need More Information?

Consult with a tax advisor or accountant to ensure that your vehicle purchase meets all Section 179 requirements. Stay up to date on IRS rules as limits and bonus depreciation percentages may change.

Using Section 179 is a smart financial move for businesses. If you’re buying or leasing a shuttle, bus, or van, now’s the time to capitalize on this valuable tax deduction!  Contact our sales experts to help.  CONTACT US