How does the Section 179 deduction affect first-year depreciation for trucks weighing over 14,000 pounds?
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For tax year 2025, the Section 179 deduction can have a significant impact on the first-year depreciation of trucks weighing over 14,000 pounds, but the rules and limits differ from those for lighter vehicles.
1. Section 179 Deduction for Heavy Trucks (Over 14,000 Pounds GVWR)
Eligibility and Limits:- Trucks with a Gross Vehicle Weight Rating (GVWR) over 14,000 pounds are not subject to the special Section 179 dollar cap that applies to certain SUVs and vehicles between 6,001 and 14,000 pounds GVWR. Instead, they are treated as general business equipment for Section 179 purposes.- For 2025, the overall maximum Section 179 deduction is $1,250,000, reduced dollar-for-dollar if the total cost of Section 179 property placed in service exceeds $3,130,000. These limits are indexed for inflation in future years.
Application:- If a business purchases a qualifying truck over 14,000 pounds GVWR and uses it more than 50% for business, it may elect to expense up to the full purchase price (up to the annual Section 179 limit) in the year the truck is placed in service.- There is no special lower cap for these heavy trucks, unlike the $31,300 cap for certain SUVs in 2025.
Example:- If a business buys a $150,000 truck with a GVWR of 16,000 pounds and uses it 100% for business, it may elect to expense the entire $150,000 under Section 179, provided it has sufficient taxable income and has not exceeded the overall Section 179 limit for the year.
2. Interaction with Bonus Depreciation
- After applying Section 179, any remaining basis in the truck (if the full cost is not expensed under Section 179) is eligible for bonus depreciation.
- For 2025, bonus depreciation is 40% for property acquired before January 20, 2025, and placed in service in 2025. However, under the One Big Beautiful Bill Act (OBBBA), property acquired after January 19, 2025, and placed in service in 2025 is eligible for 100% bonus depreciation.
- Bonus depreciation is applied after Section 179 and before regular MACRS depreciation.
Example:- If only $100,000 of a $150,000 truck is expensed under Section 179, the remaining $50,000 is eligible for 40% bonus depreciation (if acquired before January 20, 2025), resulting in a $20,000 deduction. The remaining $30,000 would then be depreciated under MACRS.
3. MACRS Depreciation
- Any remaining basis after Section 179 and bonus depreciation is depreciated over the truck’s MACRS recovery period (generally 5 years for trucks), using the 200% declining balance method with a half-year convention.
4. Business Use Requirement and Recordkeeping
- The truck must be used more than 50% for business to qualify for Section 179 and bonus depreciation.
- Adequate records must be kept to substantiate business use, including mileage logs and expense receipts.
5. Summary of First-Year Deduction Sequence
- Section 179 deduction: Up to the full cost of the truck, limited by the annual Section 179 cap and business income.
- Bonus depreciation: Applied to any remaining basis after Section 179.
- MACRS depreciation: Applied to any remaining basis after Section 179 and bonus depreciation.
6. No Special Cap for Trucks Over 14,000 Pounds
- Unlike SUVs and certain other vehicles, there is no special lower Section 179 cap for trucks over 14,000 pounds GVWR. The only limits are the overall Section 179 dollar limit and the business income limitation.
In summary: For trucks weighing over 14,000 pounds, Section 179 allows expensing up to the full purchase price (subject to the annual limit and business income), with no special lower cap. Any remaining basis is eligible for bonus depreciation and then MACRS. This can result in a very large first-year deduction, often allowing the entire cost of the truck to be written off in the year it is placed in service, provided the taxpayer has sufficient taxable income and has not exceeded the Section 179 limit.
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