Tax Deductions for Business Owners

To qualify for a section 179 deduction for a business vehicle, it must be bought and put into service during the year in which you are applying for the section 179 deduction. Being placed in service means that a business asset is ready and available for specific use in a business or for the production of income.3

In addition:
The vehicle must be eligible property, including machinery, furniture, and fixtures. Land and leased property are not eligible.  The most important qualification for section 179 deduction purposes is business use. You can only take a section 179 deduction for vehicles used more than 50% of the time for business purposes. The deduction is limited to the amount of use and can't be taken on personal use.

• The vehicle must be new or "new to you," meaning that you can buy a used vehicle if it is first used during the year you take the deduction.
• The vehicle may not be used for transporting people or property for hire.
• You can't deduct more than the cost of the vehicle as a business expense.
• You must put the vehicle "into service" (use it in your business) by December 31 of the tax year. If you don't use it, you can't get the deduction, so make sure you can prove the vehicle was used in your business by the end of December, in case of a tax audit.
• You cannot deduct more than your business net income for the year.