Section 179 for Vehicles Under 6,000 lbs: Caps, Bonus Depreciation

A business vehicle weighing 6,000 pounds or less qualifies for the Section 179 deduction, but the first-year write-off is capped at $20,300 for a vehicle placed in service in 2026, no matter how much the vehicle actually costs.¹ That $20,300 is the combined ceiling for Section 179 expensing and bonus depreciation together. Anything above it gets recovered over the next several years under separate annual limits, so a $50,000 sedan used entirely for business takes roughly six years to fully depreciate. This is very different from the treatment of heavier SUVs and trucks, where the whole purchase price can often be written off in year one.

How the IRS Decides Your Vehicle Is Under 6,000 Pounds

The 6,000-pound line is a hard cutoff, but the weight the IRS uses depends on the vehicle type. For cars and crossover SUVs, the measure is unloaded gross vehicle weight, roughly the curb weight without passengers or cargo. For trucks and vans, the IRS uses loaded gross vehicle weight, which matches the GVWR printed on the manufacturer’s door sticker.²

This distinction trips people up. A large sedan with a GVWR above 6,000 pounds can still fall under the luxury auto caps because its unloaded weight is below the threshold. If you are shopping specifically for the tax benefit, check the curb weight or unloaded weight for cars and crossovers, not the GVWR.

Vehicles at or below 6,000 pounds under the applicable measure are treated as “passenger automobiles” and are subject to the annual depreciation caps under Section 280F.³ Most sedans, compact SUVs, and crossovers land here: Honda CR-V, Toyota RAV4, Tesla Model 3, and similar vehicles.

2026 Deduction Caps Year by Year

The IRS publishes inflation-adjusted caps each year that limit how much depreciation you can claim on a passenger automobile. For a vehicle placed in service in 2026 with 100% bonus depreciation claimed, the annual limits are:¹

Year 1: $20,300
Year 2: $19,800
Year 3: $11,900
Each year after: $7,160 until the vehicle is fully depreciated

If you choose not to claim bonus depreciation, the year-one cap drops to $12,300. The limits for years two through four stay the same.¹ The $8,000 difference is the bonus depreciation component.

These caps do not limit what the vehicle can cost. They cap how much of the cost you can deduct in a given year. A $30,000 vehicle used 100% for business takes about four years to fully depreciate. A $50,000 vehicle takes closer to six. The math is straightforward, but the timeline surprises people who assume Section 179 lets them expense the whole purchase up front.

How Section 179 and Bonus Depreciation Stack

Section 179 and bonus depreciation are separate deductions, but for a passenger automobile under 6,000 pounds, they share one annual ceiling. Section 179, bonus depreciation, and regular depreciation combined cannot exceed the $20,300 year-one cap.¹

The deductions apply in order. You first elect Section 179 on Form 4562, which reduces the vehicle’s depreciable basis.⁴ Bonus depreciation applies to the remaining basis. Neither can push the total past the annual cap. Here is how a $45,000 vehicle used 100% for business plays out in year one:

Section 179 deduction: $12,300
Remaining basis: $32,700
Bonus depreciation: $8,000 (the $20,300 cap minus the $12,300 already claimed)
Total first-year deduction: $20,300
Remaining $24,700 depreciates over years two through six

The One Big Beautiful Bill Act made 100% bonus depreciation permanent for qualified property acquired after January 19, 2025.⁵ The permanent 100% rate does not change the annual caps for lighter vehicles, but it keeps the $8,000 bonus component in play every year.

Both new and used vehicles qualify for Section 179, as long as the vehicle is new to your business, purchased for use in a trade or business, and not acquired from a related party. There is no requirement that it come off a dealer lot as brand new.

You Need More Than 50% Business Use

Your vehicle must be used more than 50% for business in the year you place it in service to qualify for Section 179 or bonus depreciation. Business use at or below 50% limits you to straight-line depreciation over five years, which produces a much smaller annual deduction.³

Business use is calculated by dividing business miles by total miles for the year. The most common mistake is counting the daily commute. Driving from home to your regular workplace is personal commuting no matter how far it is, and taking business calls during the drive does not convert those miles.⁶ Trips from your office to a client site, a second business location, or a temporary work location do count.

When business use is above 50% but below 100%, the annual cap gets prorated. At 70% business use, your first-year limit is $14,210 (70% of $20,300), not the full amount.¹ The remaining 30% is personal and non-deductible.

Record-Keeping That Holds Up

The IRS requires contemporaneous records of vehicle use. You need a log showing the date of each trip, the destination, the business purpose, and the miles driven. A mileage-tracking app or spreadsheet updated throughout the year is much more credible than a log reconstructed at tax time. Keep these records for as long as you claim depreciation on the vehicle and at least three years after the return reporting the final depreciation or sale.⁶

If Business Use Later Drops Below 50%

The 50% threshold is not a one-time test. If business use falls to 50% or below in any later year while you are still depreciating the vehicle, you owe depreciation recapture. The difference between the accelerated depreciation you already claimed and the straight-line depreciation you would have been limited to becomes ordinary income in the year of the drop. Report it on Form 4797.⁷ Shifting a business vehicle to primarily personal use after taking a large first-year deduction claws back the benefit.

Selling or Trading the Vehicle Later

A business vehicle is Section 1245 property. Any gain on sale up to the total depreciation you have claimed gets taxed as ordinary income rather than at capital gains rates.⁷ This includes Section 179 deductions, bonus depreciation, and regular MACRS depreciation. The recapture is the lesser of the total depreciation claimed or the gain on the sale.

An example: you buy a sedan for $45,000 and over four years claim $20,300 + $19,800 + $4,900 = $45,000 in total depreciation, bringing the adjusted basis to zero. If you sell for $18,000, the entire $18,000 is ordinary income because it is less than the $45,000 of depreciation claimed. Sell for $3,000 and the recapture is $3,000. Sell at a loss and there is no recapture. The sale is reported on Form 4797.

Recapture is the tradeoff for accelerated deductions. The larger the first-year write-off, the larger the potential recapture on disposition. It usually does not undo the value of the upfront deduction, but factor it into the full picture rather than treating the initial write-off as free money.

Electric Vehicles Have a Basis Adjustment

If you claim the Section 30D clean vehicle credit (up to $7,500) on an electric or plug-in hybrid, the vehicle’s depreciable basis is reduced by the amount of the credit.⁸ A $45,000 electric sedan with a $7,500 credit has a depreciable basis of $37,500. The annual caps still apply, so the credit mainly reduces how much cost is left to depreciate in later years, not your first-year deduction. Total lifetime depreciation, though, is smaller.

The separate Section 45W commercial clean vehicle credit was terminated by the One Big Beautiful Bill Act for vehicles acquired after September 30, 2025.⁹ For a 2026 purchase, only Section 30D remains available, and its basis reduction still applies if you claim it.

Leased Vehicles Are Not a Workaround

Leasing does not escape the luxury auto restrictions. Instead of depreciation caps, the IRS imposes a “lease inclusion amount” that reduces your lease payment deduction each year. If the vehicle’s fair market value at lease start exceeds $62,000, you add an inclusion amount to gross income for each year of the lease.¹ The dollar figure comes from an IRS appendix table based on the vehicle’s fair market value and lease year, prorated for days in your tax year and multiplied by your business use percentage.⁶ The inclusion is small in early years and grows over the lease term. The 50% business use rule applies to leases the same way it does to purchases.

Your State May Not Follow Federal Rules

Many states do not conform to federal Section 179 or bonus depreciation. California, Georgia, Hawaii, Illinois, Connecticut, and roughly a dozen others either disallow bonus depreciation entirely, impose lower Section 179 caps, or require you to add back the federal deduction and spread it over several years on the state return. Your state taxable income can end up much higher than your federal figure in the purchase year, producing an unexpected state tax bill. Check your state’s conformity rules before relying on the federal deduction to forecast total tax savings.

1
IRS. Revenue Procedure 2026-15
2
Internal Revenue Service. Instructions for Form 4562 – Listed Property
3
Office of the Law Revision Counsel. 26 USC 280F – Limitation on Depreciation for Luxury Automobiles
4
Internal Revenue Service. Instructions for Form 4562 (2025)
5
Internal Revenue Service. Treasury, IRS Issue Guidance on the Additional First Year Depreciation Deduction Amended as Part of the One, Big, Beautiful Bill
6
Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
7
Internal Revenue Service. Publication 544 (2025), Sales and Other Dispositions of Assets
8
Office of the Law Revision Counsel. 26 U.S. Code 30D – Clean Vehicle Credit
9
Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill