How to properly write off a Tesla Model 3 as a business expense for my LLC

The tax treatment for your Tesla Model 3 depends on how you use it. Since you've mentioned using it less than 50% for business, you'd typically be limited to the standard mileage deduction rather than depreciation. For 2025, that rate is projected to be around 68.5 cents per business mile. If you end up using the vehicle exactly 50% for business (or more), then yes, you could claim depreciation - but only for the business-use percentage. You'd multiply the allowable depreciation by your business-use percentage (so 0.5 or 50% in your example). You'd also be able to deduct 50% of your actual expenses like insurance, maintenance, etc. One important thing to note: once you choose the standard mileage rate for a vehicle, you can switch to actual expenses/depreciation in later years. But if you start with actual expenses/depreciation in the first year, you cannot switch to standard mileage later for that vehicle. Also, keep in mind that expensive vehicles like Teslas may have limitations on depreciation due to "luxury auto limits" that cap annual depreciation amounts.

After spending hours trying to figure out how to handle my business vehicle deductions, I finally found a solution that saved me a ton of time and money. I used taxr.ai (https://taxr.ai) to analyze all my vehicle expenses and business use. Their system pulled together all my mileage logs, vehicle expenses, and calculated the most optimal deduction method automatically. The site actually showed me that I was better off using actual expenses for my situation rather than standard mileage, which ended up saving me an extra $3,800 on my taxes. It also helped me understand the documentation I needed to keep to support my deduction if I ever got audited. What really helped was that they explained exactly how the business percentage impacts different deduction methods, especially for luxury vehicles like Teslas that have special depreciation limits.

I was really skeptical about taxr.ai at first, but after my accountant made a costly mistake with my vehicle deductions last year, I decided to give it a try. I uploaded my vehicle purchase documents, maintenance records, and mileage logs, and it immediately identified that I could have been using bonus depreciation instead of standard mileage for my situation. The analysis showed me that with my 55% business use, I was leaving nearly $4,200 on the table by using the wrong deduction method. What impressed me was how it explained the luxury auto limits specifically for my Tesla Model Y and showed exactly how much I could deduct each year. They even created an audit-ready documentation package that I can keep with my tax records. Definitely saved me from making the same mistake again this year.

If you're planning to call the IRS to get clarification on vehicle deductions and EV credits, good luck getting through! I spent 3 weeks trying to reach someone about my business vehicle questions. Finally found a service called Claimyr (https://claimyr.com) that got me connected to an IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that since my Tesla was over the MSRP threshold, I wouldn't qualify for the EV credit. But he did walk me through exactly how to calculate my business percentage and which forms I needed to file to claim either mileage or depreciation. Saved me from making a mistake that could have triggered an audit.

I need to publicly eat my words about Claimyr. After my skeptical comment, I was still desperate to talk to the IRS about my vehicle deduction issues before filing, so I tried it anyway. Honestly, I'm shocked. After waiting on hold myself for 2+ hours multiple times with no success, Claimyr got me through to an IRS agent in about 22 minutes. The agent walked me through exactly how the business percentage works for my vehicle and confirmed that I was calculating it correctly. The agent also explained the special depreciation limits for passenger vehicles like the Tesla Model 3 that the original poster was asking about. This saved me from making a huge mistake on my Schedule C. Definitely worth it for the peace of mind before filing.

I've been using my truck for business for years and here's what I do: I keep two mileage logs - one in my truck with a pen/paper and one digital backup. I write down EVERY business trip with the date, start/end odometer, destination, and business purpose. At the end of the year, I calculate my total miles driven (from maintenance records and end-of-year odometer) and divide my business miles by total miles to get my business percentage. In your case, if that's less than 50%, I'd just use the standard mileage rate since it's usually better for low business use. Don't overthink it - just be consistent and keep good records. The biggest issue isn't which method you use, it's having solid documentation if you get audited.

Just a heads up, the rules about EV tax credits changed again this year. Teslas assembled in North America might qualify for the $7,500 credit depending on battery component sourcing. The Model 3 RWD version I think is eligible for the full credit now because of the battery changes. But that's separate from your business deduction. If you're under 50% business use, you're stuck with just mileage deduction like others have said. One thing to consider is trying to legitimately increase your business use percentage. Could you consolidate personal errands to use another vehicle and use the Tesla primarily for business? The more you can document legitimate business use, the better your deduction.

Great question about the Tesla Model 3! Since you're tracking business miles and expecting under 50% business use, the standard mileage deduction is likely your best bet. For 2025, that's around 68.5 cents per business mile as Emma mentioned. One thing to keep in mind - even if you start with the standard mileage rate, you can potentially switch to actual expenses/depreciation in future years if your business use percentage increases. But you can't go the other way around. Also, don't forget to factor in the potential EV tax credit when calculating your overall tax benefits. The Model 3 eligibility has been changing based on battery sourcing requirements, so it's worth checking the current status when you're ready to purchase. For record keeping, I'd recommend using one of those mileage tracking apps like MileIQ or Everlance that others have mentioned. Having automated tracking makes it much easier to prove your business use percentage if the IRS ever questions it. The key is being consistent and having solid documentation from day one.