Tax Incentives for New Truck Purchases
Tax incentives are created by the U.S government to encourage businesses to invest in their equipment and help grow the economy. And today, many companies are taking advantage of different tax incentives that would help them purchase properties such as trucks.Â
 There are two commonly used tax incentives of the IRS, the Bonus Depreciation and the Section 179 Deduction.Â
 Bonus Depreciation Deduction
 It is also known as the additional first-year depreciation deduction. It is a type of tax incentive that allows businesses and commercial box truck dealers to immediately deduct a substantial percentage of the purchases of qualified assets such as machinery and truck vehicles, rather than write them off over its "useful life."Â
 The TCJA or Tax Cuts and Jobs Act of 2018 expanded the bonus depreciation deduction provision. Thus, the deduction of 50% increases into 100% first-year bonus depreciation for eligible properties purchased and placed in service after September 27, 2017, and before January 1, 2023. However, all suitable properties purchased before September 28, 2017, remain at a 50% deduction.
 Bonus Depreciation Qualifications
 The following are the qualifications to be met for the 100% bonus depreciation deduction:
 l The property wasn't used at any time before the taxpayer or its predecessor acquired it.
 - The property wasn't purchased from the related party of the taxpayer.
 - The property wasn't obtained from a component member of a controlled group of corporations by the taxpayer.
 l The basis of the used property isn’t in whole or in part by reference to the property's adjusted basis in the hands of the seller or transferor.
 - The basis of the used property is not figured under the provision for deciding the basis of property acquired from a decedent.
 The basis of property determined by reference, and based on other property held at any time by the taxpayer is not included in the cost of the used property eligible for bonus depreciation (for example, in a like-kind exchange or involuntary conversion).
 The businesses and commercial box truck dealers use this tax code to deduct the full amount used to purchase eligible equipment and software during the tax year. Therefore, if you bought or leased a piece of qualifying equipment like truck dealer Oklahoma City, you can deduct it from the gross business income.
 Before, a business can write-off the amount of the newly purchased through depreciation. For instance, if you bought a truck from a box truck dealer worth $1,000,000, you can spread out the deduction for, let's say, five years. So, every year, you can deduct $20,000 as your tax incentive. But with the new and improved Section 179 Deduction, you could subtract the truck's full purchase price for the current tax year to recover the expense instead of spreading out the amount to several years.
 The Section 179 deduction qualifies both the new and used equipment as long as it is "new to you." While Bonus Depreciation only covers new equipment in previous years, only recently that the Bonus Depreciation deduction qualifies used equipment.Â
 Section 179 Limitations
 Under Section 179 deduction, there are two limits on the amount you can elect as a deduction: the dollar limits and the business income limit.
 Dollar limits. For 2020, there is a $1,040,000 cap allowed to be deducted for eligible equipment, and the "total equipment purchased" not exceeding $2,590,000. It means that the total amount for all the newly purchased property for the business should be no more than the allowed cap. The dollar limit can be subject to adjustment to cover the inflation rate.Â
 Business Income Limit. After applying the dollar limit, the total deductions should not be more than your taxable business income. It means that this tax incentive should not cause an income loss. If you cannot deduct the full purchased amount in one year, you can carry it over to the next taxable year.
 Section 179 Qualifications
 - All vehicles or trucks that are subject for Section 179 deduction must meet the following qualifications:
 - The vehicle can be a brand-new or used truck as long as it is "new to you" during the year, you take it as a deduction.
 - The vehicle must be bought and put into service during the year when you intend to apply the Section 179 deduction. Therefore, the vehicle must be in use for business before December 31 of that year.
 - Aside from vehicles, other eligible properties are machinery, furniture, and fixtures. Land and leased property are not qualified.Â
 - The company must buy the vehicle or truck for business-related purposes.Â
 Which Vehicles Qualify?
 For a vehicle to qualify for the full Section 179 Deduction, the number one requirement is its purpose should be mainly for business-related purposes. Here are some features of the vehicles that serve as work vehicles and are not for personal use:
 - Vehicles that have more than nine-seater passengers at the back of the driver's seat.Â
 - Vehicles with fully enclosed driver's compartment/ cargo area, no seating at all behind the driver's seat, and no section in the body should be protruding out more than 30 inches ahead of the leading edge of the windshield. Or, in other words, a typical cargo van.
 - All heavy construction equipment, forklifts, and similar others are qualified.
 - All typical "over-the-road" tractors are eligible.
 A vehicle such as trucks and vans that don't meet the guidelines above can still be eligible for Section 179 deduction as long as it is used more than 50% of the time for business. However, these business vehicles' allowed deduction is limited to $11,160 for cars and $11,560 for trucks and vans. Some exceptions to this provision are the following:
 - Ambulance or hearses explicitly used for the business.
 - Transport vans, taxis, and other vehicles to specifically transport people or property for hire.Â
 - Qualified non-personal use vehicles particularly customized for the business. For instance, a work van without seating behind the driver, permanent shelving installed, and exterior painted with the company's name.Â
 - Other heavy "non-SUV" vehicles and truck dealers with a cargo of at least six feet in interior length (this area must not be accessible from the passenger area.)
 Additionally, certain vehicles bought from a box truck dealer with gross vehicle weight rating above 6,000 lbs. but not more than 14,000 lbs. qualify for a deduction of up to $25,000 only if placed in service before December 31 and meet other requirements.