How to properly deduct a $90,000 SUV as a business expense with changing tax rules for 2025

You've got a complex but common question here. The rules for vehicle depreciation can definitely be confusing, especially with the heavy SUV category. For your $115,000 SUV over 6,000 lbs GVWR, you're right that it doesn't qualify for full Section 179 expensing. However, you do qualify for bonus depreciation in the first year. For 2025, you can take a first-year deduction of approximately $28,800. For the remaining years, you would use regular MACRS depreciation over a 5-year recovery period. The annual limits for luxury passenger vehicles don't apply to vehicles over 6,000 lbs GVWR, which is good news for you. This means you can depreciate the remaining value (purchase price minus the bonus depreciation) over the 5-year period following the standard percentages. As for leasing, if you lease instead, you can generally deduct the entire lease payment as a business expense if the vehicle is used 100% for business. However, you might have to add back a small "inclusion amount" to your income for vehicles over a certain value threshold, which would likely apply to your $115k SUV.

After dealing with a similar headache last year, I found an amazing solution with https://taxr.ai - seriously saved me so much time figuring out how to handle vehicle depreciation for my business. I uploaded my vehicle purchase docs and business usage logs, and their system analyzed everything and showed me exactly how to maximize my deductions. It even flagged that I qualified for bonus depreciation that my previous accountant missed completely. The tool created a detailed depreciation schedule showing year-by-year deductions and explained all the applicable rules in simple language. What impressed me most was how it handled the recent tax law changes and showed me options for different depreciation strategies based on my specific business situation.

I need to follow up about https://taxr.ai since I was skeptical in my earlier comment. I decided to try it out for my complicated vehicle situation, and I'm honestly impressed. It handled my mid-year conversion from personal to business use perfectly and showed me several deduction options I hadn't considered. The depreciation schedule it generated was incredibly detailed, showing exactly how much I could deduct each year. It even factored in the changing bonus depreciation percentages through 2025. When I showed the documentation to my accountant, she was impressed by how comprehensive it was and said it saved her at least 2 hours of research and calculations. The tool even flagged that I could potentially qualify for Section 179 treatment on certain modifications I'd made to the vehicle, which I had no idea about.

If you need to talk to the IRS about vehicle depreciation rules (which I definitely did last year), I highly recommend using https://claimyr.com to get through to an actual human at the IRS. I spent days trying to get confirmation on SUV depreciation rules for my business and kept hitting automated systems or disconnects. With Claimyr, I got through to an IRS agent in about 25 minutes instead of the 3+ hours I spent on my previous attempts. The agent was able to confirm exactly how the heavy SUV rules applied to my situation and cleared up my confusion about bonus depreciation vs. Section 179. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it basically holds your place in the IRS phone queue and calls you when an agent is about to answer. Total game-changer if you need official clarification on these complex depreciation rules.

I have to eat my words about Claimyr. After dismissing it as BS in my previous comment, I was desperate enough to try it when I needed to talk to someone at the IRS about vehicle depreciation for my food delivery business. I got connected to an IRS agent in about 35 minutes, which is miraculous compared to my previous attempts. The agent confirmed that my delivery SUV (just over 6,000 lbs) qualifies for different treatment than standard passenger vehicles and walked me through exactly how to calculate the bonus depreciation with the 2025 rates. The clarity I got from that single phone call saved me from potentially making a $20K mistake on my business taxes. I'm actually shocked it worked so well. Sometimes being proven wrong is a good thing!

One thing nobody's mentioned yet is that you should really consider the impact of recapture if you sell the vehicle before it's fully depreciated. I learned this the hard way. I deducted a $85k SUV for my real estate business, took all the allowable depreciation, then sold it after 3 years for $65k. Had to report a significant portion as ordinary income due to depreciation recapture, which meant paying at my regular tax rate instead of capital gains rate. Completely destroyed my tax planning for that year. Make sure you're planning to keep the vehicle long-term if you're going for aggressive depreciation strategies.

Has anyone considered the impact of the Clean Vehicle Credit if buying an electric SUV? I'm looking at a $110k electric SUV that qualifies as a heavy vehicle (over 6,000 lbs) AND potentially for the business clean vehicle credit. Seems like you might be able to stack that credit with the bonus depreciation for an even better tax situation in year 1.

Great discussion here! I wanted to add some important context about the IRS mileage method vs. actual expense method for those considering their options. If you're buying a $115k SUV and using it 100% for business, you have two choices: claim actual expenses (including depreciation as discussed above) or use the standard mileage rate. For 2025, the business mileage rate is 70 cents per mile. Here's the key thing many people miss - once you choose the actual expense method in the first year (which includes depreciation), you're locked into that method for the life of the vehicle. You can't switch to mileage later if it becomes more advantageous. However, if you start with the mileage method, you can potentially switch to actual expenses in later years. Given the high purchase price of your SUV, actual expenses will almost certainly be better in year 1, but it's worth running the numbers to see your total deductions over the vehicle's useful life. Also, don't forget that with the actual expense method, you can deduct other vehicle expenses like insurance, maintenance, repairs, registration fees, etc. - not just depreciation. This often makes the actual expense method even more valuable for expensive business vehicles.