Year-End Vehicle Purchases: A Smart Way to Maximize 2025 Deductions

If you're considering replacing your business vehicle, now may be the perfect time. Buying and placing a qualifying vehicle in service by December 31, 2025, can create substantial deductions for your 2025 tax year. 

To qualify, the vehicle must be owned and driven for business use before year-end — even one business mile counts.

1. SUVs, Crossovers, and Vans (6,001+ lbs GVWR)
Purchasing a new or used SUV or crossover classified as a truck gives you access to multiple deductions:

• 100% bonus depreciation

• Up to $31,300 in Section 179 expensing

• Five-year MACRS depreciation

• No luxury vehicle limits

Example: A $50,000 SUV used 90% for business allows a $45,000 deduction in 2025.

2. Pickup Trucks
A new or used pickup placed in service by December 31 can also qualify for:

• 100% bonus depreciation

• Up to $1,220,000 in Section 179 expensing (2025 limit)

• No luxury limits (for trucks with beds 6+ feet long)

3. Vehicles Under 6,000 lbs GVWR

Passenger cars, smaller SUVs, and light trucks under the 6,000-lb threshold are still deductible, but the annual deduction limits are lower due to the IRS “luxury auto” depreciation caps.

For 2025, the maximum first-year deduction for these vehicles is:

• Up to $20,400 with 100% bonus depreciation (if eligible), or

• Up to $12,400 without bonus depreciation.

In subsequent years, depreciation under MACRS declines until the vehicle’s full cost is recovered.

Why it matters: Even smaller vehicles can provide meaningful deductions when combined with business mileage and operating expenses.