“Did you know there’s one weird trick to write tens of thousands of dollars in car purchases off of your taxes? You won’t believe how easy it is to save this tax season! Drive a luxury SUV for free with this tax hack! What time does the Super Bowl start watch stream online free!”
Every tax season, the internet starts to look like this — headlines, banner ads, and social media posts all screaming that you’re paying too much in taxes and there’s a secret, hidden way to stop. They’re often talking about Section 179 — the “Hummer loophole,” which allows business owners who purchase heavy vehicles for work and deduct them through their business. There’s a lot more to Section 179 than those TikTokers will tell you, though.
A piece from StreetsBlog delved into the TikTok phenomenon of Section 179, taking much of the wind out of those “one weird trick” sails. The post didn’t cover every arcane qualifier of the U.S. Tax Code, but went over some of the largest obstacles faced by folks trying to convince the government that their shiny new Bentayga is tax-deductible. From StreetsBlog:
In the last few years, the internet has exploded with memey tributes to Section 179 of the US tax code, which, as of tax year 2023, allows U.S. business owners to deduct the costs of newly-purchased vehicles that weigh more than 6,000 pounds, provided they use that megacar for “business purposes” at least 51 percent of the time and don’t exceed a deduction limit of $28,900.
Add on “bonus depreciation” for business owners — a similar but differently structured deduction that TikTokers frequently conflate with Section 179 — and at least this year, business owners can deduct up to 80 percent of the cost of their ultra-heavy SUVs, vans, and trucks, often decreasing their tax bills by tens of thousands of dollars in a single year rather than depreciating their vehicle more slowly over time.
Even these qualifiers, numerous and inconvenient though they are, don’t tell the full story of the Hummer Loophole. In fact, precious few vehicles qualify for a total deduction — if your heavy truck is at all practical for normal daily use, it probably doesn’t count. From Section179.org:
Business Vehicles for Full Section 179 Deduction
Work-centric vehicles, mainly used for business, generally qualify for a full Section 179 deduction. These include:
– Vehicles like shuttle vans that can seat more than nine passengers behind the driver’s seat
– Classic cargo vans featuring a fully-enclosed driver’s compartment/cargo area, with no seating behind the driver’s seat
– Over-the-road Tractor Trailers
– “Singular use” business vehicles like ambulances or hearses
Most folks who chase these deductions aren’t buying ambulances (I said most) so they’ll instead be looking at a partial Section 179 deduction. This is where you can start going by Gross Vehicle Weight Rating — not curb weight — but also where that pesky “percentage of business use” qualifier kicks in. You can only deduct a heavy truck based on the amount you actually use it for work; a vehicle that sees 50 percent personal mileage can only have 50 percent of its purchase price deducted — up to a maximum of $28,900 for 2023.
This deduction also different depending on your tax bracket. Your actual cash savings will depend on your income, which in many cases will leave you with an even smaller amount that actually ends up back in your pocket. Say you’ve got a shiny new $50,000 vehicle, a 75 percent business use rate, and you sit in the 22 percent tax bracket — the actual amount of cash returned to your pocket will be more on the order of $8,250.
Of course, I am not a qualified financial advisor, and none of this is qualified financial advice — if you’re looking to deduct your new Hummer EV, talk to an accountant first. But this is a word of warning You can’t always trust the tax advice you get from TikTok. I know. I’m shocked too.