Commercial Vehicles For Your Maine Business
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Maximize Year-End Tax Benefits with Commercial Vehicles
As the year comes to a close, now is the perfect time for businesses to invest in commercial vehicles and take advantage of significant tax deductions. Whether you’re expanding your fleet or upgrading your current vehicles, purchasing before the year-end can maximize your tax benefits under Section 179 as well as many other tax benefits.
Under Section 179 of the IRS tax code, businesses can deduct the full purchase price of qualifying equipment, including commercial vehicles, purchased or financed during the tax year. Instead of depreciating the vehicle’s value over several years, businesses can claim the entire cost as a deduction in the year the vehicle is placed into service. The limit for Section 179 deductions can vary each year, but for 2023, it is up to $1.16 million, with a phase-out starting at $2.89 million of total equipment purchases.
Section 179 deduction eligible vehicles include:
Trucks and vans that are used at least 50% for business purposes.
Heavy vehicles (with a gross vehicle weight rating above 6,000 pounds) like work trucks and large vans, can often be fully deducted.
On top of the Section 179 deduction, businesses may also be eligible for Bonus Depreciation, which allows further deductions beyond the Section 179 cap. For 2023, businesses can claim 80% of the cost of new and used qualifying vehicles in the first year of service. This is especially useful for businesses purchasing large fleets or more expensive vehicles. However, bonus depreciation is being phased down, so it’s important to act before it reduces further.
If your business leases commercial vehicles, you may still qualify for tax incentives, though the benefits may be structured differently. Lease agreements often build tax savings into your monthly payment, lowering your costs without needing to claim the deductions directly on your taxes.
While not a direct tax incentive, electric and hybrid vehicles can also save businesses on fuel and maintenance costs, which impacts the overall cost of ownership. With fewer moving parts, electric vehicles typically have lower maintenance costs, and businesses may see long-term savings that go beyond the initial tax credits.
Learn more at Section179.org
Important Tax Information Disclaimer
While the tax incentives and deductions mentioned on this page can provide significant savings, it’s crucial to consult with a qualified tax professional before making any financial decisions. Every business’s tax situation is unique, and a tax advisor can help ensure that you’re properly applying for and maximizing the benefits available to you under both state and federal tax laws. This will ensure that you’re in full compliance with the latest regulations and that you’re taking advantage of every applicable incentive.
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