Are you thinking about purchasing a new vehicle for your construction site? While tax considerations may not top your list of priorities when purchasing a personal vehicle, a new truck or SUV with certain qualities can lead to a substantial tax benefit for your business.

Construction vehicles need to be strong and sturdy and lucky for construction workers, a vehicle’s weight is the primary factor in gaining a tax benefit.

If you are wondering what the vehicle’s weight has to do with claiming a tax deduction, you are not alone. This article will examine the often-overlooked rules associated with deducting so-called “heavy” SUVs and trucks.

Car Deductions 101
To start, here is some background information on why tax considerations matter when purchasing a construction vehicle. Generally, when a vehicle is purchased, the cost of the vehicle is not allowed to be deducted in full during the year of purchase. Instead, the cost must be deducted, or “depreciated,” over a number of years (generally, five). This is where a vehicle’s weight comes into play. The vehicle’s weight, or its Gross Vehicle Weight Rating (GVWR), has a huge effect on the amount that can be deducted for tax purposes in the first year of business use.

There are two significant types of deductions that this article will address: the Section 179 deduction and the bonus depreciation deduction. The Section 179 deduction allows qualified taxpayers to deduct part or all of the cost of certain vehicles in the first year of business use. Bonus depreciation allows for an “additional” deduction of up to 100% of the cost of the vehicle in the first year if not fully deducted under Section 179. Since there is considerable overlap among these two deductions, the focus of the vehicle factors is to generally highlight important considerations instead of separating each deduction.

The following are some key points to consider before purchasing.