2025 Tax Code 179 and Bonus Depreciation Guide for Self-Employed and Business Owners

IMPORTANT MESSAGE TO ALL CARPRO SHOW LISTENERS FROM

JERRY REYNOLDS, THE CAR PRO:

Friends, we have been publishing the latest rules and eligible vehicles list for Tax Code 179 for over a decade. Many of you wait until the last minute to make your purchase. Many wait until right after Christmas, but things can happen that could cause you to miss the December 31, 2025 deadline. I encourage you to reach out to one of our Certified Car Pro Friends at a CarPro approved dealership NOW. They will help you figure out how to get the eligible vehicle you want by the end of the year, or worst case, have a VIN so you can complete the paperwork by December 31, 2025.

F-150

Super Duty

F-450

F-550

Expedition

Transit

IMPORTANT MESSAGE TO ALL CAR PRO SHOW LISTENERS FROM JERRY REYNOLDS, THE CAR PRO:

Friends, we have been publishing the latest rules and eligible vehicles list for Tax Code 179 for over a decade. I encourage you to reach out to one of our Certified Car Pro Dealers at a CarPro approved dealership. They will help you figure out how to get the eligible vehicle you want. Note: Many automobile buyers will now be eligible to write the interest off on car loans, as a result of the “big beautiful bill” signed into law this July. The details of the rules are below along with the latest on Tax Code 179.

Self-Employed and Business Owners:

2025 Tax Code 179 and Bonus Depreciation Information

Below is our annual guide to Tax Code Section 179 for self-employed and business owners who buy a vehicle. This guide encompasses qualifying vehicles purchased in the 2025 calendar year for the Section 179 deduction and vehicles purchased after January 19, 2025.

Tax Code 179

Tax Code 179, the special deduction to write off equipment in the year purchased, was extended permanently in 2015 legislation. The One Big Beautiful Bill Act (OBBBA) of 2025 greatly enhanced the deductions under Section 179.

This special deduction allows businesses for 2025 tax year to write off up to $2,500,000 of the cost of depreciable assets if they are purchased by December 31, 2025. This can include new and used machinery, heavy equipment, furniture and fixtures, and certain vehicles.

In addition to the $2,500,000 cap, there are certain limitations to Section 179.

A few of the limitations and considerations are as follows:

If you purchase more than $4,000,000 of assets for the year you will have this deduction phased out. Once the equipment purchased exceeds that amount, the deduction is reduced on a dollar-for-dollar basis.
You must have a total overall positive income from all sources, not just the specific business, to take the Section 179 deduction.
The vehicle must be placed in service by December 31, 2025, to take advantage of the write-off on your 2025 tax return.
The vehicle must be used for at least 50% business use.
Only the business use percentage of the asset’s cost applies for the Section 179 calculation.

For assets purchased in 2025 there is a $31,300 depreciation cap ($30,500 for 2024) that applies to SUVs and crossovers with a Gross Weight above 6,000 lbs.

Bonus Depreciation

Another great tax break, Bonus Depreciation, has been made even better. Under the TCJA in 2017 Bonus Depreciation allows you to deduct a specified percentage of the cost of assets in the year of purchase. This deduction is allowed even if you do NOT have an overall taxable income position. Generally, there is no maximum limitation like there is in the Section 179 calculation. Previously for 2025, the provisions for the deduction would have been 40% of an asset’s cost and further reduced annually by 20% until expiring at the end of 2026.

The OBBBA permanently extends and modifies this. The allowance is increased to 100% for property acquired and placed in service after January 19, 2025. In many cases that have limitations such as SUV’s, the bonus depreciation will be more advantageous than Section 179, depending on the business use percentage. For example, for SUV’s purchased in 2025 there is $31,300 depreciation cap that applies to SUVs and crossovers with a Gross Weight above 6,000 lbs. for Section 179 treatment. However, assets eligible for Bonus Depreciation have no limitation; hence, the deduction may be greater using the Bonus Depreciation depending on the business use percentage.

Limitations

Keep in mind that vehicles are subject to limitations on any of the depreciation deductions based on business use of the vehicle. The vehicle must be used at least 50% for business to qualify for each method described.

Small & Luxury Vehicles

Small cars under 6,000 lbs., luxury autos, are capped at $20,400. The IRS has imposed these limits to help discourage the depreciation of high value vehicles.

Heavy Vehicles

SUVs and crossovers with Gross Weight above 6,000 lbs. are capped at $31,300 if Section 179 is taken. SUVs and crossovers with Gross Weight above 6,000 lbs. do not have a cap if Bonus Depreciation is taken. Pickups and vans with no rear passenger seating that are above 6,000 lbs. also do not have a cap. Every major brand of pickup (1/2 ton and up) is over 6,000-pounds for purposes of this deduction. This includes Ford, Ram, Chevrolet, Toyota, GMC, and Nissan. When you get down to the mid-sized trucks you might be surprised to find that some of these are right on the line. A 2025 Chevrolet Colorado crew cab can be over the weight limit, but the extended cab is not, so it might save enough in taxes to make it worthwhile to upgrade to a bigger size. If Section 179 or Bonus depreciation is used, standard mileage rates cannot be used for any periods after the year depreciation is taken and actual auto expenses (fuel, tires, repairs, etc.) must be tracked going forward.

It should be noted that the limitation caps discussed above assume 100% business use. If the business use drops below 100%, the dollar limits are proportionately reduced.

Mileage

Another great automobile deduction that is often overlooked is the mileage deduction. This is a unique deduction because it does not matter how much you actually spend but it matters how much you drive. This is the deduction you use if you are not depreciating the cost of your vehicle. This would be used when mileage is a better deduction than depreciation, or when the depreciation methods described above are not allowed (for example if you used your vehicle less than 50% for business).

The standard mileage rate beginning on January 1, 2025, is increasing to 70.0 cents per mile. This is up from the amount per mile for 2024 which was 67.0 cents per mile. Pay close attention to this important change.

This deduction is much easier than keeping track of your expenses for gasoline, oil changes, tire replacement, etc. Keep in mind, however, that you cannot double dip and use the mileage deduction in addition to expensing your gasoline, oil changes, tire replacement, etc. In addition, if Section 179 or Bonus depreciation is used, standard mileage rates cannot be used for any periods after the year depreciation is taken and actual auto expenses (fuel, tires, repairs, etc.) must be tracked going forward. This rate applies to gasoline and diesel-powered vehicles and to electric and hybrid-electric automobiles.

NEW! Car Loan Interest Deduction

The OBBBA creates a deduction of up to $10,000 for qualified passenger vehicle loan interest during a particular year. Qualified passenger vehicle loan interest means any interest paid or accrued during the tax year on indebtedness incurred in 2025 through 2028 secured by a first lien on an applicable passenger vehicle for personal use. The new vehicle must commence use with the purchaser (you must be first/only owner) and must have the final assembly of the vehicle in the US. You do not need to itemize your deductions to claim the deduction for the interest paid or accrued. This deduction is further limited to individuals with adjusted gross income of less than $100,000 or joint filers with adjusted gross income of less than $200,000.

Which Vehicles May Qualify for Tax Code 179?

Here is a quick reference of some vehicles that are over 6,000-pounds GVWR. There may be others not listed here, I highly recommend you look on the inside of the driver’s door to verify the Gross Vehicle Weight Rating, sometimes equipment and options push a vehicle over the limit to qualify, and conversely a lack of options can keep a vehicle from qualifying, so do your homework!

IMPORTANT: This is the list of 2025 models that qualify, however, in 99% of the cases, the 2024 models of the same vehicle will have a higher, not lower GVWR.