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Taxes 10 min read

Section 179 & The Truck Deduction: Timing Your Vehicle Purchase Right

If you're buying a work truck this year, when you buy it matters as much as what you buy. Here's how Section 179 and bonus depreciation actually work for trades vehicles in 2026.

Kellen Boulter, CPA
Founder, Northbound Financial · Texas-licensed CPA

The deduction every trades owner should understand

Here's a typical scenario:

An HVAC contractor needs a new service truck. He shops around in October, finds a 2025 F-250 for $72,000. The dealer is pushing him hard to close before month-end. His brother-in-law, who runs a pool service company, says "just wait until January, you don't want a big truck payment in December anyway."

Wrong advice. Buying the truck in October vs. January is a difference of about $15,000 in current-year taxes for this contractor.

That's not magic. That's Section 179 and bonus depreciation working together. Let's break it down.

What is Section 179?

Section 179 is a part of the tax code that lets businesses deduct the full cost of qualifying equipment and vehicles in the year you place them in service — instead of depreciating them over five or seven years.

For 2026:

For 99% of trades businesses, those upper limits don't matter. The relevant question is whether your vehicle or equipment purchase qualifies, and how much you can deduct. Full details in IRS Publication 946.

What is bonus depreciation?

Bonus depreciation is a separate but related provision. It lets you deduct a percentage of the remaining basis on qualified property, on top of (or instead of) Section 179.

The big 2026 news: Under the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, 100% bonus depreciation was reinstated for property acquired and placed in service after January 19, 2025. (Previously, bonus depreciation was phasing down — 60% in 2024, would have been 40% in 2025.)

This is huge for trades businesses buying work trucks and equipment, because it removes the SUV cap problem (more on that below).

How the two stack

The typical play for trades businesses:

  1. Section 179 first, up to applicable limits
  2. 100% bonus depreciation on whatever basis is left

For most heavy work trucks (over 6,000 lbs GVWR, not classified as an SUV), this combination lets you write off 100% of the truck's cost in year one.

The vehicle weight rules (this is where it gets specific)

The IRS divides vehicles into three categories based on GVWR (Gross Vehicle Weight Rating — found on the sticker inside the driver's door jamb).

Light vehicles (under 6,000 lbs GVWR)

This includes most passenger cars, small SUVs (RAV4, CR-V), and small pickups.

2026 first-year deduction cap: ~$20,400 (Section 179 limit ~$12,200 + ~$8,000 bonus).

Even if you spend $50,000 on a vehicle in this class, you can only deduct around $20,400 in year one. The rest gets depreciated over 5–6 years.

Practical implication: A "personal use" SUV or sedan you're trying to deduct as a business vehicle is severely capped. The IRS is intentional about this.

Heavy SUVs (6,001–14,000 lbs GVWR)

This includes Tahoe, Suburban, Yukon, Expedition, Escalade, Sequoia, Land Cruiser, Range Rover, Wagoneer, etc.

2026 Section 179 SUV cap: $32,000

Here's where 100% bonus depreciation rescues you. Because there's no separate cap on bonus depreciation for these vehicles, you can:

Example: $90,000 Cadillac Escalade (7,500 lbs GVWR), 100% business use

Section 179: $32,000

Bonus depreciation: $58,000

Total year-one deduction: $90,000

Without the OBBBA change to 100% bonus depreciation, you'd be looking at a much smaller year-one deduction. This is one of the biggest tax wins of 2026 for businesses buying premium SUVs.

Heavy trucks and vans (6,001–14,000 lbs GVWR, NOT classified as SUVs)

This is where work trucks live. Includes:

No SUV cap applies because they're designed for cargo, not passenger transport. To clear the SUV cap, vehicles generally need to be:

Most full-size work trucks with cargo beds 6+ feet long clear this. Most work vans clear this. Crew cabs with short beds may not — check carefully.

Example: $72,000 F-250 crew cab with 6.75-ft bed, 100% business use

Section 179: $72,000 (under the $2.56M annual cap, no SUV cap)

Total year-one deduction: $72,000

Heavy commercial trucks (over 14,000 lbs GVWR)

Dump trucks, large box trucks, semis. No SUV cap, full Section 179 / bonus depreciation eligibility. These are essentially treated as pure equipment.

The "placed in service" rule that traps owners

This is the rule that gets people in trouble at year-end.

To claim Section 179 or bonus depreciation in a given tax year, the vehicle must be placed in service by December 31 of that year. That means:

If you sign paperwork on December 28 but the truck doesn't get delivered until January 4, you do not get the deduction in the current year. You wait an entire year.

Practical implication: If you're chasing a year-end deduction, you need to be working with the dealer in October/November, not December 27. Trucks get backed up. Don't gamble.

The 50% business use rule

To qualify for Section 179 (and most bonus depreciation), the vehicle must be used more than 50% for business. The deduction is then prorated to your actual business-use percentage.

$72,000 F-250 used 80% for business

Deductible amount: 80% × $72,000 = $57,600

That's what you can Section 179 / bonus depreciate

Documentation matters: Keep a contemporaneous mileage log showing business vs. personal trips. Apps like MileIQ or Everlance handle this automatically.

If business use drops below 50% in a later year, you can face recapture — meaning some of the prior deduction gets pulled back into income. Plan accordingly if a truck is going to transition to mostly personal use.

The business income limitation

Section 179 deductions cannot exceed your taxable business income for the year. Bonus depreciation has no such limit (which is one reason it's so powerful in 2026).

Example: $120,000 in business profit, $200,000 in equipment purchases

Section 179 allowed: limited to $120,000 in current year

Remaining $80,000 can be used via bonus depreciation (no income limit) OR Section 179 carryforward to next year

This matters when you're buying multiple large items in one year, or when your profit is lower than your equipment spend.

Section 179 vs. bonus depreciation — when to use which

Both achieve similar results, but they have different trade-offs:

FeatureSection 179Bonus Depreciation
ElectionElected by deduction; can choose amountDefault for eligible property; can elect out
Income limitYes (can't exceed business income)No (can create a loss)
SUV cap (heavy SUVs)Yes ($32,000 for 2026)No
CarryforwardYes, indefinitelyNo (use it or elect out by class)
Per-asset choiceYes, asset by assetAll-or-nothing by asset class

Practical strategy for most trades businesses:

Your CPA should be running these scenarios as part of year-end planning — not just defaulting to whichever is easier to enter on the form.

Used vs. new

Both Section 179 and 100% bonus depreciation (under current rules) apply to used vehicles and equipment — as long as they're "new to you" (not previously owned by the same taxpayer or a related party).

This is huge for trades businesses. Used work trucks at 30,000–50,000 miles can be a much better value than new, and you get the same first-year deduction.

Texas-specific considerations

A few Texas notes:

Common mistakes

  1. Buying a luxury SUV thinking it's "deductible." Yes, technically. But the 100% deduction is now possible thanks to 2026 bonus depreciation — that doesn't mean a $120K Escalade is the right business decision. The deduction is real, but it's still tax-deductible spending.
  2. Waiting until December 28. You don't control whether the dealer gets the truck delivered. Don't bet $15,000 in tax savings on logistics.
  3. Not documenting business use. No mileage log = no deduction on audit.
  4. Trading in too soon. If you Section 179 a truck and trade it in two years later, there can be recapture and basis complications. Plan to keep deducted vehicles at least 4–5 years to fully clear out.
  5. Forgetting about the income limitation. Buying $200K in equipment when your business made $50K creates a Section 179 carryforward, not a current-year windfall.
  6. Assuming bonus depreciation is permanent. Tax law changes. The 100% rate reinstated by OBBBA is in effect now, but tax policy shifts. Take advantage of favorable rules when they exist.

What to do next

If you're considering a vehicle purchase this year:

  1. Verify the GVWR of the specific truck/van/SUV you're considering (driver's door jamb sticker)
  2. Run the math both ways — Section 179 only vs. Section 179 + bonus depreciation
  3. Check the placed-in-service timing — don't risk a December delivery
  4. Confirm your business-use percentage is and will remain over 50%
  5. Set up mileage tracking on day one

Or — talk to your CPA before you sign. Five minutes of planning beats five years of regret.

Book a free 30-minute call with Northbound if you want to run the numbers on a specific purchase.

Related reading

Section 179 limits, SUV caps, and bonus depreciation rates are based on 2026 federal tax law including OBBBA-effective changes as of publication. Confirm current figures and your specific facts with a qualified tax professional before making purchase decisions.

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