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As a business owner, your work truck is more than just your mode of transportation. It’s an essential tool to help you run your business as effectively as possible. And as a hefty investment, finding ways to save on operational costs is key. Thankfully, there are numerous federal and state government tax incentives on work trucks and other commercial vehicles available to eligible business owners.
The team at BZ Chevrolet is here to help you determine which rebates apply to you and whether you have a qualifying vehicle. Read on for a comprehensive guide on government rebates for work trucks and business owners!
​What Tax Incentives Are Available for Work Trucks?
Section 179 Deduction: Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment, including work trucks, purchased or financed during the tax year. This deduction is particularly beneficial for businesses that need to deduct the full cost of the truck in the year it is placed in service rather than depreciating it over several years.
Bonus Depreciation: In addition to the Section 179 deduction, businesses may be eligible for bonus depreciation, which allows them to deduct a certain percentage of the purchase price of qualifying equipment in the year it is placed in service. Bonus depreciation percentages can vary depending on the tax year and may change over time.
Fuel Tax Credits: Businesses that use work trucks for eligible purposes, such as transporting goods or performing services, may be eligible for fuel tax credits. These credits allow businesses to claim a refund or credit for federal excise taxes paid on certain types of fuel used in qualified vehicles.
Heavy Vehicle Use Tax (HVUT) Exemption: Certain types of heavy-duty trucks used exclusively for business purposes may be exempt from the federal Heavy Vehicle Use Tax (HVUT), which is typically levied on vehicles with a gross weight of 55,000 pounds or more. This exemption can result in significant savings for businesses that operate large work trucks.
Mileage Deductions: Businesses can typically deduct expenses related to operating work trucks, including fuel, maintenance, repairs, insurance, and depreciation, as business expenses on their tax returns. This includes deducting mileage driven for business purposes using the standard mileage rate or actual expenses method.
State and Local Incentives: In addition to federal tax incentives, businesses may also be eligible for state and local tax incentives for purchasing or operating work trucks. These incentives can vary widely depending on the location and may include exemptions, credits, or rebates for vehicle purchases or usage.
EV Tax Credits: Individuals, businesses and tax-exempt organizations that purchase a qualifying electric vehicle may qualify for a federal Clean Vehicle or Commercial Clean Vehicle income tax credit of up to $7,500 for vehicles placed in service in a trade or business.
What is the Eligibility Criterion for Tax Rebates?
Whether new or used, a business vehicle qualifies as long as you haven't owned it before. Whether you buy it outright or lease/finance it, you can still qualify for the tax deduction. Below are the main criteria for commercial vehicle tax rebates.
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Ownership: The vehicle must be purchased or leased under your name or business name.
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Business Use: The vehicle should be used in more than 50% of your business. If it's mainly for personal use and only occasionally used for business, it does not qualify.
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Source: The vehicle cannot be acquired from a related party. As such, vehicles that come from an inheritance or gifts from parents, spouses, siblings, grandparents, etc, as well as donations from charities and trusts, are not eligible.
What Vehicles Qualify for Tax Rebates?
The IRS categorizes vehicles eligible for tax deductions into three main groups: Heavy, Light, and Other.
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Heavy Vehicles: This pertains to any vehicle with a gross vehicle weight rating (GVWR) ranging from 6,000 pounds to 14,000 pounds. Various pickup trucks (like the Silverado 1500), full-size SUVs, and commercial vans fall under this segment.
Shop Heavy Duty Trucks
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Light Vehicle: These have a manufacturer's GVWR below 6,000 pounds. Examples are passenger cars, small utility trucks, and crossover SUVs.
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Other Vehicles: This category is for vehicles weighing more than 14,000 pounds or those that have been modified for nonpersonal use.
Find Your Work Truck at BZ Chevrolet
It's essential for businesses to consult with a tax professional or accountant to determine which tax incentives and deductions apply to their specific situation and to ensure compliance with tax laws and regulations. Additionally, tax incentives and deductions may change over time, so businesses should stay informed about any updates or changes to tax laws that may affect their eligibility for tax benefits related to work trucks.
If you’re looking for a reliable work truck in Ligonier, IN, look no further than BZ Chevrolet! As a Chevrolet Business Elite Dealer, we're dedicated to learning your unique business needs and ensuring your work vehicles never miss a beat. Browse our inventory of work-ready vehicles or contact us to learn more about our commitment to serving your business.