I have lots of clients who want their vehicles to be company vehicles, but they only use the vehicles for commuting back and forth to their offices and for other personal uses. So they don’t get to claim a business vehicle. They can get reimbursed for their business miles by their business at the IRS mileage rate.
But there are numerous breaks for buyers of business vehicles under the tax laws. The annual depreciation caps for passenger autos stay the same in 2020. If bonus depreciation is claimed, the first-year ceiling is $18,100 for new and used cars first put in service this year. The second- and third-year caps are $16,100 and $9,700, after then $5,760 a year till fully depreciated minus salvage value.
If no bonus depreciation is taken, the first-year cap is $10,100. Buyers of heavy SUVs used solely for business can write off the full cost, thanks to bonus depreciation. SUVs must have a gross weight rating over 6,000 pounds. Also, up to 100% of the cost of a big pickup truck can be expensed. When expensing business assets, the amount expensed cannot exceed taxable income from the taxpayer’s business. Bonus depreciation does not have this limit.