Business Vehicle Expenses Tax Overview
Overview
Methods:
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Actual expense – must continue in subsequent years if selected in 1st year
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Standard mileage – can later switch to actual w/SL Dep.
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2025 Rate: 70.0¢ (up from 67¢ 2024)
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Up to four vehicles
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Leased vehicles ok if std used entire term
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Interest not included – deduct separately if SE
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Taxes not included – deduct separately
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2025 First Year Luxury Vehicle Limits – (6,000# or less, and placed in service in 2025):
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$12,200
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$20,200 with bonus depreciation
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Sport Utility Vehicles:
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14,000 pounds gross vehicle weight or less
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Sec 179 limited to $31,300 (2025) up from $30,500 (2024)
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Heavy SUVs are vehicles with a gross vehicle weight (GVW) rating of more than 6,000 pounds and are exempt from the luxury auto dollar caps and qualify for bonus depreciation.
Related IRS Publications and Forms
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IRS Publication 463 – Travel and Entertainment
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Lease Inclusion Tables – Pub 463
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IRS Publication 946 – How to Depreciate Property
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Form 2106 – Employee Business Expenses
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Form 4562 – Depreciation and Amortization
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IRC Sec 280F – Luxury Automobiles