Which Vehicles Qualify for the SUV Tax Deduction?

When tax time comes around, people start looking for deductions to lower their income taxes. Section 179, because of the way it was written, allows small and medium-size businesses to write off the cost of an SUV. Section 179 is used so often to write off the cost of SUVs, it is sometimes called the SUV deduction. There are some things you need to consider before you rush out and buy that Hummer you've had your eye on, though.

Section 179

Section 179 of the IRS tax code allows businesses to deduct the full cost of certain equipment purchased during that tax year. Usually, deductions on equipment have to be taken over a number of years, depending on what the equipment is. The Section 179 deduction was created to encourage businesses to invest in their businesses by buying equipment. As beneficial as the deduction is, it does have limits. As of 2009, the total amount that can be written off for a purchase is $250,000 and the total amount of equipment purchased can't exceed $800,000.

Use of SUV

While this deduction can be used to write off SUVs, it must be purchased for a business and used for business. The deduction also begins to phase out if more than $800,000 in equipment is purchased, which targets the deduction for small and medium-size businesses. Personal SUVs and SUVs purchased by large businesses can't be written off even if they meet the specific requirements for the vehicles.

Weight

This is the key requirement that allows SUVs to qualify for the Section 179 deduction. The SUV must be a vehicle designed to carry passengers on public roads. It must have a gross vehicle weight of more than 6,000 pounds but less than 14,000 pounds. Most full-size SUVs meet this requirement--including popular SUVs like the Chevrolet Tahoe, Cadillac Escalade and Toyota Sequoia. Though the SUV can be truck- or car-based, a truck-based SUV is heavier and more likely to weigh at least 6,000 pounds.

Heavier SUVs

If your SUV weighs more than 14,000 and doesn't qualify for a full deduction, you can take $25,000 in the purchase year and normal vehicle depreciation amounts for the remaining amount over the next few years.

Other Sectin 179 Qualifications

Section 179 includes other qualifications for vehicles. A heavy non-SUV vehicle must have a cargo area at least 6 feet long and not be easily accessible from the passenger area. It can seat at least nine passengers. The vehicle has an enclosed driver's compartment/cargo area, no seating behind the driver's seat and no body section extending more than 30 inches ahead of the leading edge of the windshield.

References

• Section.org: Vehicle deductions
• Bankrate.com: Hummer Tax Break Gets Hammered
• Ask.Cars.com: SUV deduction