1.Do you need a replacement business car, SUV, van, or pickup truck?
2.Do you need more tax deductions this year?
If you answered yes to both questions, you need to examine this article and get ready to smile.
Thanks to the One Big Beautiful Bill Act (OBBBA), you can write off the full business cost of certain vehicles and likely big chunks of other vehicles.
Don’t procrastinate. If you want the vehicle deduction, you need to (a) own the vehicle, and (b) place it in business service on or before December 31, 2025.
To ensure compliance with the “placed in service” rule, drive the vehicle at least one business mile on or before December 31, 2025. In other words, you want to both own and drive the vehicle to ensure that it qualifies for the big deductions.1
Now that you have the basics, let’s get to the tax benefits.
Let’s say that on or before December 31, 2025, you or your S corporation buys and places in service a new or used SUV or crossover vehicle that the manufacturer classifies as a truck and that has a gross vehicle weight rating (GVWR) of 6,001 pounds or more. This newly purchased vehicle gives you the ability to
· use bonus depreciation of 100 percent thanks to the OBBBA;2
· elect Section 179 expensing of up to $31,300;3
· elect MACRS depreciation using the five-year table; and
· avoid the luxury limits that cap vehicle depreciation deductions.
Key point. Bonus depreciation is automatic unless you elect out, and it applies to both new and used vehicles and other property.
Example 1. On or before December 31, 2025, you buy and place in service a used, $50,000 qualifying SUV for which you can claim 90 percent business use. Your business cost is $45,000 (90 percent x $50,000). Your maximum write-off for 2025 is $45,000.
If you don’t want 100 percent bonus depreciation in 2025, you can take three steps:
1.Elect out of bonus depreciation for that property class.
2.Expense any portion of the business cost of up to $31,300 using Section 179.
3.Take the remaining cost using MACRS depreciation over five years.
From what we’ve seen, almost all SUVs, crossover vehicles, and vans with a GVWR of 6,001 pounds or more qualify as trucks for purposes of both 100 percent bonus depreciation and the up-to-$31,300 Section 179 SUV expensing election.
Example 2. On or before December 31, 2025, you buy and place in service a $53,300 qualifying SUV for which you can claim 100 percent business use. If you elect out of bonus depreciation and elect $31,300 in Section 179 expensing instead, your maximum 2025 write-off for the cost of the SUV is either $35,700 or $32,400, computed as follows:
·$31,300 in Section 179 expensing, plus
·$4,400 in MACRS depreciation (20 percent x $22,000)—or $1,100 in MACRS depreciation if the mid-quarter convention applies because you placed more than 40 percent of your MACRS assets in service in the final quarter of the year.
For a list of some qualifying SUVs and crossover vehicles, see List of Popular Vehicles with GVWRs Greater Than 6,000 Pounds.
You may have noted that cars don’t fit in the more-than-6,000-pound-GVWR group. For a car to qualify for the benefits described above, it has to have a “curb weight” greater than 6,000 pounds.4
In our search, we could not find any 2025 cars that topped the curb weight of 6,000 pounds.
Beware. When we searched online, we found various cars that supposedly had curb weights over 6,000 pounds. When we drilled down on the cars themselves, however, the curb weights were less than 6,000 pounds.
Key point. When buying a vehicle where the weight is critical, make sure to open the passenger door and check the label on the door or the door frame for the official weight.
If you or your corporation buys and places in service a qualifying pickup truck (new or used) on or before December 31, 2025, then this newly purchased vehicle gives you four big benefits:
1.Bonus depreciation of up to 100 percent
2.Section 179 expensing of up to $2,500,0005
3.MACRS depreciation using the five-year table
4.No luxury limits on vehicle depreciation deductions
To qualify for full Section 179 expensing, the pickup truck must have
·a GVWR of more than 6,000 pounds, and
·a cargo area (commonly called a “bed”) of at least six feet in interior length that is not easily accessible from the passenger compartment.6
Example 3. You pay $55,000 for a qualifying pickup truck that you use 91 percent for business. You can use Section 179 to write off your entire business cost of $50,050 ($55,000 x 91 percent).
Short bed. If the pickup truck passes the more-than-6,000-pound-GVWR test but fails the bed-length test, the tax code classifies it as an SUV. That’s not bad. The pickup designated as an SUV is still eligible for 100 percent bonus depreciation or up to the $31,300 SUV expensing limit. (See Example 1 above for how the SUV treatment works.)
A new or used cargo or passenger van with a GVWR of more than 6,000 pounds that is bought and placed in service on or before December 31, 2025, can qualify for four big tax benefits:
1.No luxury limits on the vehicle
2.Bonus depreciation of 100 percent
3.Section 179 expensing of up to $2,500,000
4.MACRS depreciation using the five-year table
Cargo Van
To qualify for either 100 percent bonus depreciation or up to $2,500,000 in Section 179 expensing, the cargo van must have
·a GVWR of more than 6,000 pounds,
·a fully enclosed driver compartment separate from the load-carrying area,
·no seating behind the driver’s seat, and
·no body section that protrudes more than 30 inches ahead of the leading edge of the windshield.
If the van passes the GVWR test but fails one of the other qualifying tests listed above, the law deems it an SUV instead.
Passenger Van
If the van has a GVWR greater than 6,000 pounds and seats more than nine people behind the driver’s seat, tax law defines it as a passenger van, not an SUV, and it qualifies for Section 179 expensing of up to $2,500,000 and 100 percent bonus depreciation.
Minivan
Many of the vans that we used to think of as minivans now have GVWRs greater than 6,000 pounds and thus qualify as SUVs for the Section 179 deduction and 100 percent bonus depreciation, as explained in Example 1 above.
If you or your corporation buys and places in service a new or used passenger vehicle such as a car with a curb weight of 6,000 pounds or less (or a pickup, an SUV, or a van with a GVWR of 6,000 pounds or less) on or before December 31, 2025, then you or your corporation may claim up to $8,000 in bonus depreciation.7
Why only up to $8,000? The tax code classifies these vehicles as “luxury vehicles” and places depreciation limits on the deductions you can claim each year. Thankfully, recent limits are substantially higher than in prior years.
The 2025 luxury vehicle depreciation limits are8
·$12,200 for the first taxable year,
·$19,600 for the second taxable year,
·$11,800 for the third taxable year, and
·$7,060 for each succeeding year.
Key point. The limits described above are annual. If you choose bonus depreciation, your maximum first-year deduction is $20,200 on a depreciation-limited vehicle.
Mid-quarter trouble. There’s the possibility that you will face the mid-quarter convention, which would grant you only 5 percent MACRS depreciation on the vehicle if you placed it in service during the final quarter of the year. You trigger the mid-quarter convention when you place more than 40 percent of your MACRS assets (other than real property) in service during the final three months of the year.
Section 179 trouble. Section 179 expensing on a luxury passenger vehicle is not permitted to exceed the depreciation limit. This means Section 179 deductions are useless on autos and other vehicles that fall into the luxury depreciation-limited category.
Planning point. If you want the big deductions, forget the depreciation-limited vehicles and go for the more-than-6,000-pound-GVWR vehicles, such as heavy SUVs and pickup trucks.
If you were planning on one of the electric vehicle tax credits, it’s now too late. OBBBA terminated those tax credits on September 30, 2025.9
OBBBA makes 2025 an exceptional year for business vehicle tax deductions—but timing and vehicle type are everything.
If you buy and place in service a qualifying vehicle by December 31, 2025, you could claim massive write-offs through 100 percent bonus depreciation and Section 179 expensing.
Vehicles with a GVWR over 6,000 pounds—such as many SUVs, pickups, and vans—qualify for the most generous deductions, allowing full business cost write-offs in the year of purchase.
Cars and lighter vehicles, by contrast, face strict luxury depreciation limits, capping deductions at just over $20,000 in the first year.
Finally, note that OBBBA terminated electric vehicle tax credits after September 30, 2025, so traditional heavy vehicles are now the key vehicle path to major 2025 tax savings.
Bottom line. Buy and place in service a qualifying heavy business vehicle before year-end to maximize deductions under OBBBA. Make sure to double-check the GVWR before purchase.