2014 Business Vehicle Tax Benefits

Looking for the right vehicle for your business needs? Now might be the perfect time to buy! Here's why:

On Tuesday, December 16, 2014, Congress passed the Tax Extenders Bill which extends several 2013 tax benefits through the 2014 tax season, including raising the limit of the Section 179 tax deduction allowing small business owners to depreciate the full cost of their vehicle purchase the first year (rather than depreciating over a number of years). Prior to this bill, the maximum 2014 deduction was $25,000, but with the passage of this bill into law the limit increases to $500,000 for the 2014 tax year.

Section 179 expense increase. With Section 179 expensing, small and mid-size business owners could immediately deduct an amount used to obtain qualifying equipment rather than divide the deduction over time according to a depreciation schedule. Until recently, business owners could deduct up to a hefty $500,000 of qualifying assets. For 2014 (and beyond), the limit plummeted to $25,000.
 
Purchases - whether paid for in cash or financed - are eligible for tax benefits under Section 179, as long as the vehicle is received by December 31, 2014.

Contact Larry H. Miller Chevrolet Murray for more information about purchasing a new vehicle for your business!

FAQ's

Q. What is the Section 179 deduction?

A. Section 179 of the IRS tax code was designed as an incentive for business owners to invest in their businesses and the economy by purchasing equipment. It allows taxpayers to elect to deduct the full purchase cost of certain types of property (up to $25,000) from their federal taxes for the year the property was purchased.

Q. Which property qualifies under Section 179?

A. Most business equipment qualifies for the Section 179 deduction. This includes tangible goods like vehicles, machinery, computers, software, and office furniture. The IRS website has a full list of equipment that qualifies for the Section 179 Tax Deduction. To qualify more than 50% of the property's use must be in the service of a trade or business.

Q. How much can you deduct?

A. The amount you can deduct is generally equal to the purchase price of qualifying property up to $25,000. There are some limitations, including a $25,000 limit on the amount a small business owner can elect to deduct for the purchase of certain sports utility vehicles. There is also a limitation for businesses that purchase more than $200,000 in qualified equipment. The IRS website has a more detailed explanation of deduction limits.

Will the 2014 Section 179 dollar limitations change?

A. Lawmakers are considering an increase to the Section 179 dollar limitation, potentially retroactive to January 1, 2014. Keep an eye on our channels for possible updates.

*The information provided here is intended as a general overview of the Section 179 Deduction. You should always consult with a tax professional on business tax deductions

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