For every business owner, there comes a time when the old vehicle will no longer suffice. Or, perhaps this is the year that you need a special purpose vehicle such as a delivery truck or van.
At some point, nearly every business owner will have to consider purchasing, leasing, or otherwise obtaining a vehicle. Before you purchase a vehicle, becoming familiar with the following tax matters may help you save money:
- Excise taxes may be imposed on the vehicle that you purchase.
- Alternative-fuel vehicles such as hybrid cars and plug-in electric vehicles may be eligible for special tax breaks.
- The expensing election may allow you to deduct a portion of the cost of a vehicle placed in service during the year.
If you bought a vehicle in 2012, keep two things in mind. First, if you bought a car for personal use, you may be able to deduct the state and local sales tax imposed on the purchase as an additional itemized deduction. Second, if you bought a vehicle for business, both the expensing election and bonus depreciation are available to increase the amount deductible for depreciation for the 2012 tax year.