You buy a $65,000 SUV for your business. You expect to deduct the full amount in year one. Then your CPA tells you: "Sorry, the IRS caps your first-year deduction at $20,400."
What happened? Your vehicle weighs less than 6,000 pounds, which triggers Section 280F luxury automobile limits. But here's the thing: if you'd chosen a vehicle just a few hundred pounds heavier, you could have deducted the entire $65,000.
Section 280F of the Internal Revenue Code limits the annual depreciation deduction for "luxury" passenger vehicles used in business. Despite the name, "luxury" doesn't mean Lamborghinis, it applies to virtually every car and light truck under 6,000 lbs GVWR (Gross Vehicle Weight Rating).
| Year | With Bonus Depreciation | Without Bonus |
|---|---|---|
| Year 1 | $20,400 | $12,400 |
| Year 2 | $19,800 | $19,800 |
| Year 3 | $11,900 | $11,900 |
| Year 4+ | $7,160 | $7,160 |
That means a $65,000 BMW 3 Series (3,800 lbs) takes roughly 7 years to fully depreciate.
Vehicles with a GVWR over 6,000 lbs are exempt from Section 280F caps. Instead, they qualify for Section 179 immediate expensing, meaning you can deduct the entire cost in year one, up to $1,220,000 (2026 limit).
Common business vehicles that qualify for full Section 179:
| Vehicle | GVWR | Year 1 Deduction (§179) |
|---|---|---|
| Chevy Suburban | 7,500 lbs | Full cost |
| Ford F-150 | 6,100-7,050 lbs | Full cost |
| BMW X5 | 6,063 lbs | Full cost |
| Porsche Cayenne | 6,261 lbs | Full cost |
| Tesla Model X | 6,250 lbs | Full cost |
| Mercedes GLS | 6,945 lbs | Full cost |
Same price. Same business use. One weighs more:
| BMW 3 Series ($65K) | BMW X5 ($65K) | |
|---|---|---|
| Weight | 3,800 lbs | 6,063 lbs |
| Year 1 Deduction | $20,400 | $65,000 |
| Full Depreciation | ~7 years | Year 1 |
| Tax Savings Year 1 (32%) | $6,528 | $20,800 |
The difference between a $20,400 deduction and a $65,000 deduction is often just a few hundred pounds. Check the door jamb before you sign the papers.