End-of-Year Tax Deductions for Business Vehicles

End-of-Year Tax Deductions for Business Vehicles

Have you been thinking about purchasing or leasing a new vehicle for your business? Now may be the time to make a move.

As we come to the end of 2022, business owners are considering ways to save through tax deductions. There may be money on the table for those who know how to take advantage of them.

Although business taxes can be complex, thankfully, there is one tax benefit that is fairly straightforward.
 

Section 179

In 2017, as part of the Tax Cuts and Jobs Act, Section 179 of the IRS tax code was updated to encourage small business investment through increased tax breaks on equipment. For businesses with fleets, this means deductions of up to the full purchase price of new or used vehicles made during the current year and applies to both outright purchases and leases.

According to Brian Lockhart, VP of Sales for GM Financial, “right now, Section 179 may be an ideal tax benefit for businesses needing to replace or expand vehicles and fleets.”

For eligible businesses, the potential effect on the bottom line is significant. Section 179 allows for deductions on up to $19,200 on some vehicles, and up to 100% of the vehicle price for others. As GM’s comprehensive list shows, possible tax benefits exist for a wide range of business vehicles.

Businesses considering a vehicle purchase and/or lease may want to set their sights on 2022 because on Jan. 1, 2023, the 100% deduction will decrease to 80%.

Is it time to make a move?

If the benefits of Section 179 are moving you off the fence about purchasing a new vehicle for your business, here are a couple of things to consider first:

• Consult your tax professional. While Section 179 is straightforward, Lockhart says business owners should consult with their tax professional to ensure eligibility and that proper procedures are followed.
• Consider buying or leasing before the end of the year. Lockhart says, “As long as vehicles are purchased by Dec. 31, a business is eligible for Section 179.” To potentially qualify for 2022 tax deductions, businesses would need to purchase before the end of the year.

GM Financial brings experience and expertise in fleet management for any size business. In addition to consulting your tax professional, reach out to us before the end of the year to discuss possibilities for purchasing or leasing Section 179-eligible vehicles.

TALK WITH A FINANCING EXPERT

By Ross Appleton, GM Financial

Ross Appleton loves to help people navigate their toughest challenges. He believes that clarity is the key to flourishing in a complex world, and that a timely dad joke is good for the soul. When he isn’t talking or writing about big ideas, you’ll likely find him reading about them in old books. He is married, and two of his four children currently serve in the U.S. Army.