Vehicles and Section 179
One of the more popular uses for the Section 179 Deduction is for vehicles. In fact, Section 179 is 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, it is still true that Section 179 can be very advantageous in buying vehicles for your business.

Here are the general guidelines for using the Section 179 Deduction for vehicle purchases:

What Vehicles Qualify?

1. SUV’s with a Gross Vehicle Weight (GVW) of 6,000 lbs or more (see below limits for these)
2. Heavy “non-SUV” vehicles 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 (although some "extended cab" pickups may have beds that are too small to qualify.)
3. Vehicles that can seat nine-plus passengers behind the driver's seat (i.e.: Hotel / Airport shuttle vans, etc.)
4. 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.

The above can be new or used (“new to you” is the key.) They can also be leased, financed, or bought outright. The vehicle in question must also be used for business at least 50% of the time.

Heavy SUV’s get a reduced deduction
There is a limit you can deduct for example #1 above – SUV’s. The limit for the deduction is $25,000. However, you can take a normal depreciation deduction for the rest. So if you buy a $50,000 Hummer, you can deduct $25,000, and then take normal depreciation (20%) on the remaining $25,000.

Examples 2-4 qualify for the normal Section 179 Deduction limits.