Special Rules for Business Use of SUVs

• Posted on April 25, 2008
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Many of today’s sport utility vehicles that are more than 6,000 pounds in gross weight are not subject to the luxury auto rules. Owners using these vehicles for business are able to utilize both the Sec 179 expense deduction and regular depreciation. However, as the Sec 179 expense limits were increased through the years taxpayers were able to write-off the entire business portion cost of most SUVs in the first year. This perceived abuse prompted Congress to impose a cap on the Sec 179 expense deduction as it applies to certain SUVs.

Thus, the Sec 179 expense deduction is limited to $25,000 for sport utility vehicles rated at 14,000 pounds gross vehicle weight or less. The $25,000 still represents a substantially higher amount than allowed for other vehicles that are subject to the luxury auto limits.

There are some complicated exclusions to the SUV restriction. They include vehicles that are designed for more than nine individuals, equipped with an open cargo area, etc. Please contact this office for further details.