Can You Write Off a Vehicle Under 6000 Pounds?

Businesses and self-employed individuals can reduce their taxable income by deducting costs associated with a vehicle used for their trade or business. These deductions aim to offset the financial burden of operating a vehicle that generates income. The ability to “write off” a vehicle means claiming a deduction for its business-related expenses on a tax return, which can lower the overall tax liability.

Determining Eligibility for Vehicle Deductions

To deduct vehicle expenses, the vehicle must be used for ordinary and necessary purposes in your trade or business. For instance, traveling to client sites, making deliveries, or moving between job locations typically qualifies as business use. However, commuting from your home to your regular place of business is generally considered personal use and is not deductible.

These deductions primarily apply to self-employed individuals, independent contractors, and small business owners. Employees generally cannot deduct unreimbursed business vehicle expenses on their personal tax returns for tax years after 2017, due to changes from the Tax Cuts and Jobs Act. If a vehicle is used for both business and personal activities, only the business portion is eligible for deduction.

Determining the business-use percentage is fundamental for calculating any allowable deduction. This percentage is the ratio of miles driven for business purposes to the total miles driven during the tax year. For example, if a vehicle travels 10,000 miles in a year, and 6,000 of those miles are for business, then 60% of the vehicle’s expenses could potentially be deducted. Accurate tracking of business and total mileage is a prerequisite for substantiating any claim.

Understanding Deduction Methods

Taxpayers generally have two primary methods for deducting vehicle expenses: the standard mileage rate or the actual expense method. The choice depends on individual circumstances and record-keeping preferences. It is often advisable to calculate the deduction using both methods to determine which yields a greater tax benefit.

The standard mileage rate simplifies deductions by allowing a set amount for each business mile driven. This rate, adjusted annually by the IRS, covers typical vehicle operating costs such as depreciation, fuel, oil, maintenance, insurance, and registration fees. For 2025, the business mileage rate is 70 cents per mile. This method requires less detailed record-keeping compared to actual expenses, primarily needing a log of business miles.

Conversely, the actual expense method requires meticulous tracking of all costs associated with operating the vehicle for business. Deductible expenses include gas, oil, repairs, tires, insurance premiums, registration fees, interest paid on a car loan, garage rent, and tolls. Depreciation is also a significant component, allowing a portion of the vehicle’s cost to be deducted over its useful life. This method can be more beneficial for vehicles with higher operating costs or significant depreciation.

When deciding between these methods, consider factors like total miles driven for business, the vehicle’s age, and the magnitude of specific expenses. For a car you own, you must choose the standard mileage rate in the first year the car is available for business use; in later years, you can switch. If you lease a vehicle, you must use the standard mileage rate for the entire lease period if you initially choose that method.

Depreciation Rules for Vehicles

Depreciation allows businesses to recover the cost of vehicles over their useful life. For vehicles with a Gross Vehicle Weight Rating (GVWR) of 6,000 pounds or less, specific annual depreciation limits apply under Internal Revenue Code Section 280F. These “luxury car” limits cap the amount of depreciation claimed each year, regardless of the vehicle’s cost or business-use percentage.

For passenger automobiles, including trucks and vans, placed in service during 2025, the maximum depreciation deduction, if bonus depreciation is applied, is $20,200 for the first tax year. This limit decreases in subsequent years. If bonus depreciation does not apply, the first-year depreciation limit for 2025 is $12,200. These limits are adjusted annually for inflation.

Bonus depreciation allows businesses to deduct a percentage of the cost of eligible property in the year it is placed in service. For vehicles, while bonus depreciation can be claimed, it is still subject to the luxury car limits for passenger automobiles under 6,000 pounds GVWR. For instance, in 2025, the bonus depreciation rate is 40%, but the total first-year deduction for light vehicles, including bonus depreciation, cannot exceed the limit. This means the deduction for lighter vehicles is capped.

The Section 179 deduction permits businesses to expense the full purchase price of qualifying property in the year it is placed in service. For vehicles under 6,000 pounds GVWR, the Section 179 deduction is also constrained by the luxury car depreciation caps. Vehicles must be used more than 50% for business to qualify for Section 179. This contrasts with heavier vehicles (over 6,000 pounds GVWR), which are generally exempt from these limits, allowing for much larger first-year deductions, potentially up to their full purchase price under Section 179 and bonus depreciation, subject to overall business deduction caps.

Keeping Essential Records

Maintaining accurate records is fundamental for substantiating any vehicle expense deduction. The IRS often scrutinizes vehicle deductions, making proper documentation necessary to support claims and avoid audit issues. This requirement applies regardless of whether the standard mileage rate or the actual expense method is chosen.

Detailed mileage logs are a core component of required records. For each business trip, these logs should include the date, destination, the specific business purpose, and both the starting and ending odometer readings. Contemporaneous record-keeping, meaning recording information at or near the time of the trip, is highly recommended by the IRS.

Beyond mileage, if using the actual expense method, taxpayers must retain receipts, invoices, and other documentation for all vehicle-related costs. This includes records for fuel, oil, maintenance, repair services, insurance payments, registration fees, and any interest paid on a vehicle loan. Documentation of the vehicle’s purchase, including its cost and the date it was placed in service, is also necessary for depreciation purposes.