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Section 179 Tax Deduction for Small-Medium Businesses

The Section 179 tax deduction is a provision in the U.S. tax code that allows small to medium-sized businesses to deduct the cost of certain qualifying assets, including vehicles, from their taxable income in the year the assets are placed into service. This deduction is designed to encourage business investment and stimulate economic growth. Here are some key points:

  • Eligibility: To be eligible for the Section 179 deduction, your business must meet certain criteria. These criteria include being a small to medium-sized business, which generally means having total equipment purchases of less than $4,050,000. Additionally, the equipment must be in service between January 1, 2023, and December 31, 2023, and used for business purposes more than 50% of the time.
  • Qualifying Assets: Not all vehicles qualify for the Section 179 deduction. Generally, vehicles that have a gross vehicle weight rating (GVWR) of more than 6,000 pounds are eligible. This includes many larger vans, trucks, and SUVs used for business purposes. The Mercedes-Benz Sprinter van and G-wagon often qualify for the deduction due to their substantial GVWR.
  • Deduction Limit: The deduction limit for tax year 2023 is $1,160,000, meaning that businesses can deduct up to this amount from their taxable income if they purchase eligible assets, such as the Mercedes-Benz Sprinter van, and meet the criteria. The total amount of the equipment purchase cannot be more than $2,890,000. It phases out dollar-for-dollar after that, so once $4,050,000 is spent, the deduction goes away entirely.
  • Phase-Out Threshold: The deduction begins to phase out when the total cost of qualifying assets placed in service during the tax year exceeds $2,890,000. This means that if your business invests more than this threshold in a tax year, the deduction may be reduced.

Section 179 Tax Deduction FAQs

Which Mercedes-Benz Models Qualify for the Section 179 tax deduction?

  • The following models qualify for a tax break:
    • GLS 580 4MATIC
    • GLS 600 4MATIC
    • G 550 4×4 Squared
    • GLS 580 4MATIC
    • GLS 600 4MATIC
    • AMG G 63 4MATIC SUV

How long do you have to keep a vehicle under Section 179?

  • Section 179 does not specify a minimum time you must keep a vehicle. However, it is essential to meet the "business use" requirement. You must use the vehicle for business purposes at least 50% of the time to qualify for Section 179 deductions.

What is Section 179?

  • Section 179 is a tax provision that allows businesses to deduct the cost of qualifying property, including commercial vehicles, in the year they are placed in service instead of depreciating it over several years. It is designed to encourage business investments by providing tax incentives.

How does Section 179 work?

  • Section 179 allows businesses to deduct the full purchase price of qualifying assets, such as commercial vehicles, up to a certain limit, in the year they are acquired and put into service.

Get Tax Deductions for Your Business Today

For more detailed information about Section 179 and qualifying Mercedes-Benz models, stop by our Mercedes Dealer in Temecula, CA. Our Sprinter Sales Director, Lauren Rose, is here for all your commercial van needs. View our lineup of Mercedes commercial vehicles and discover your tax deduction opportunities today!