Standard MACRS Depreciation for Business Vehicles
If you use a vehicle for business purposes, the depreciation of that vehicle can be deducted from your business income -- potentially eliminating thousands of dollars in tax liability. Section 179 and bonus depreciation allow many business owners to deduct the full vehicle cost in the year of purchase rather than spreading it over 5 years. Understanding the rules helps you maximize this significant tax benefit.
Business vehicle depreciation methods and 2025 limits
| Vehicle Type | Section 179 Max (2025) | Bonus Depreciation Rate | Year 1 Max Deduction |
|---|---|---|---|
| SUV over 6,000 lbs GVWR | $30,500 (179 cap for SUVs) | 40% bonus | $30,500 + 40% of remainder |
| Truck over 6,000 lbs GVWR | $1,290,000 (no SUV cap) | 40% bonus | Full cost potentially |
| Standard passenger car | Subject to luxury limits | 40% bonus | $12,200 max Year 1 (luxury limits) |
| Heavy SUV >6,000 lbs (trucks) | Full 179 eligible | 40% | Up to full purchase price |
Vehicles with a Gross Vehicle Weight Rating (GVWR) over 6,000 pounds -- including most large SUVs, trucks, and vans -- are not subject to the strict luxury auto depreciation caps that limit deductions on standard passenger vehicles. This is why many business owners choose large trucks or SUVs: the deduction potential is dramatically higher.
Section 179 Expensing for Vehicles
- Business use percentage: Only the business-use portion of vehicle cost is deductible
- Mileage log required: IRS requires contemporaneous records of business miles for vehicle deductions
- Standard mileage rate vs actual expenses: Compare both methods -- actual is often better for expensive vehicles
- 2025 standard mileage rate: 70 cents per mile for business (2024 rate; verify current year rate)
- Lease vs buy tax comparison: Leased vehicles use different depreciation rules -- actual lease payments are deductible
Bonus Depreciation in 2025
Use the car depreciation calculator to estimate your vehicle’s current and future market value based on make, model, year, mileage, and condition.
Calculate Your Car’s Depreciation
Enter your vehicle details to see current value, projected future value, and annual depreciation cost.