Buying a Used Car for My Business - How Does Bonus Depreciation Work for 2025 Taxes?

The bonus depreciation rules have changed for 2025, so you'll want to be careful with your calculations. For 2025, bonus depreciation is at 60% (not 80%), and yes, you can apply your business use percentage to that amount. Here's how it would actually work for your example: - $13,000 vehicle cost - 60% bonus depreciation = $7,800 - 80% business use = $6,240 deductible in the first year The vehicle doesn't need to be paid in full to claim depreciation. What matters is that you've taken ownership and placed it in service for business use. If you finance it, you can still take the depreciation on the full purchase price. If you sell the vehicle after one year, you'll need to recapture the depreciation you claimed. This means the difference between your sale price and your adjusted basis (purchase price minus depreciation taken) will be treated as ordinary income, not capital gains. This can lead to a higher tax bill in the year you sell.

After reading this thread, I wanted to share my experience using taxr.ai for my business vehicle deductions last year. I was also confused about bonus depreciation rules and had a hard time figuring out if I was calculating everything correctly. I uploaded my vehicle purchase docs and expenses to https://taxr.ai and their system analyzed everything and showed me exactly how to maximize my deduction based on my business use percentage. Saved me from making a $3,200 mistake on my taxes! They also provided documentation guidelines specific to business vehicles that I could keep for my records in case of an audit. Might be worth checking out since vehicle deductions can be tricky.

Just wanted to update after trying taxr.ai for my vehicle purchase situation. I uploaded my purchase agreement and business records, and it actually found that I qualified for Section 179 deduction instead of bonus depreciation for my specific business type, which works out better for me. The analysis showed me exactly what records I need to keep and how to document everything properly for potential audits. Definitely worth the time - saved me from making a mistake that would have cost me about $4,500 in deductions.

If you're still struggling to get clear answers about vehicle depreciation, I'd recommend using Claimyr to get through to an IRS agent directly. I spent WEEKS trying to get someone on the phone about a similar vehicle depreciation question last year - kept getting disconnected or waiting for hours. I finally used https://claimyr.com and got connected to an actual IRS agent in under 15 minutes. They walked me through exactly how to document and claim my business vehicle expenses correctly. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Honestly, getting direct confirmation from the IRS gave me peace of mind that I was doing everything right, especially since vehicle deductions are common audit triggers.

OK I need to eat crow here. After my skeptical comment, I decided to try Claimyr myself since I was desperate to resolve my vehicle depreciation issue before filing my quarterly taxes. Worked exactly as advertised - got a call back in about 20 minutes with an actual IRS agent on the line. The agent confirmed that for my specific business structure, I could claim the bonus depreciation on my delivery vehicle even though I was also deducting actual expenses rather than standard mileage. Saved me hours of hold time and potentially thousands in deductions I might have been too cautious to take. Sometimes being wrong feels pretty good.

Has anyone considered just using standard mileage rate instead of bonus depreciation? For 2024 it's 67 cents per mile for business, and it's way less documentation headache. If you drive a lot for business, it might actually give you a bigger deduction. I used to track actual expenses and depreciation for my work truck, but switched to standard mileage two years ago. Bigger deduction and WAY less paperwork/stress.

Quick side question - does anyone know if buying a used SUV over 6,000 lbs GVWR would qualify for Section 179 instead of regular depreciation? I'm looking at a used Chevy Tahoe for my mobile pet grooming business and I heard the weight of the vehicle changes the tax treatment.

Based on what I've seen in this thread, it sounds like you have several good options to explore for maximizing your vehicle deduction. One thing to keep in mind is timing - if you can purchase before December 31st, 2024, you'd get the 80% bonus depreciation rate instead of the 60% rate for 2025. That could mean an extra $2,600 in first-year deductions on a $13k vehicle with 80% business use. Also consider the vehicle weight factor that Ethan brought up. If you can find a used SUV or truck over 6,000 lbs GVWR in your price range, you might qualify for full Section 179 expensing instead of bonus depreciation, which could be even better than the bonus depreciation route. For documentation, definitely start that mileage log from day one - apps like MileIQ make it pretty painless. The IRS really scrutinizes vehicle deductions, so having solid records is crucial. Have you considered whether you'd actually drive enough business miles to make the standard mileage rate (67 cents/mile for 2024) more beneficial than the actual expense method? At 80% business use, you'd need to drive about 15,500 business miles annually for standard mileage to beat the depreciation approach on a $13k vehicle.

For checking GVWR specs before shopping, I'd recommend using the manufacturer's official spec sheets or the NHTSA vehicle database at nhtsa.gov/vehicle-identification-number. You can also check Edmunds.com or KBB.com which usually list GVWR in their detailed specs section. Some popular used vehicles that typically exceed 6,000 lbs GVWR in your price range include: - Chevy Tahoe/Suburban (like Ethan mentioned) - Ford Expedition - GMC Yukon - Nissan Armada - Most full-size pickup trucks (F-150, Silverado, Ram 1500) Just double-check the specific year and trim level, as base models sometimes fall just under 6,000 lbs while higher trims exceed it. One more timing consideration - if you do find a qualifying vehicle and purchase before year-end, make sure to actually place it in service for business use before December 31st to claim the deduction. Simply buying it isn't enough; you need to start using it for business purposes. Given your high business mileage (18k-20k annually), you're definitely on the right track with actual expenses + depreciation. That's going to save you thousands compared to standard mileage rate.