Vehicle Depreciation Limits

The use of a vehicle goes far beyond just day-to-day navigation. Many individuals and companies purchase vehicles designed to be used solely for business purposes, whether the formed entity is a corporation or a small sole proprietorship. These parties will then look for ways to deduct such activities from their annual taxes. That being said, tax guidance on your vehicle can sometimes be confusing. If you’ve recently purchased a new Chevy for the above purposes and need help understanding how this will impact your business taxes, let’s walk through vehicle depreciation limits together for a deeper understanding of this topic.

What Does Vehicle Depreciation Mean? 

two men going over vehicle taxes and depreciation

Photo via Unsplash by homajob 

It’s common knowledge that once you drive a car off of a lot, it immediately loses some of its initial purchase value. However, the value of a car continues to depreciate or decline as it’s used. Why? All vehicles experience natural wear and tear that occurs throughout their life span. The more damage that it takes and the longer that it’s driven, which impacts its performance and life span, the less the car is going to be worth. 

While this is important to know if you plan on selling your car down the road, it’s an important concept for business owners and independent contractors to know as well. However, it’s important for the latter parties to understand this term for an entirely different reason: taxes. Much like other business assets, the depreciation your car experiences can actually play a role in helping you save money during tax season. 

Understanding Vehicle Depreciation

Tax deductions are designed to help you lower your overall tax liability. For business owners, these deductions are myriad, ranging from your office equipment to the property you’re renting or have ownership of. In regards to larger assets like property, depreciation allows you to deduct all or a great deal of the purchase price of your vehicle in order to lower your tax bill. If you’ve spent a great deal of your business’s resources securing a fleet of vehicles for business purposes, vehicle depreciation can be a helpful way to save money and bolster your profits. 

That being said, many business owners aren’t aware of the IRS vehicle depreciation tax laws in place that determine exactly how much you can claim for these vehicles. The most important thing to know at the time of writing is something known as the Tax Cuts and Jobs Act. Enacted in 2017, this piece of legislation makes it so that some business owners can claim unlimited 100% first-year bonus depreciation if their new or used qualifying vehicles are in operation for business between September 28, 2017, and December 31, 2022. 

If your vehicle doesn’t qualify for this bonus, there are still opportunities to claim depreciation so that you can cut down your tax bill. The current limits for non-qualifying passenger vehicles purchased and used for business during the above date are the following: 

  • $18,200 for the first tax year.
  • $16,400 for the second tax year.
  • $9,800 for the third tax year.
  • $5,860 for each succeeding year.

There are also guidelines for vehicles purchased before 2017 or for business owners who opt out of bonus depreciation, although we won’t expand upon this information in this guide as it likely won’t pertain to your situation. To better understand these tax laws and how they pertain to your business and tax liability, work with an accountant who can help you understand and apply this guidance more effectively. The information above is not meant to be used as tax advice but to illustrate how depreciation works and what you may be able to leverage next tax season. 

Which Chevy Vehicles Qualify for Tax Credits? 

When you’re purchasing a Chevy vehicle for business purposes, knowing which Chevy tax credits you can take advantage of before you buy your vehicle can help you plan out your taxes and reduce your overall tax liability before you begin using them for your business. Whether you’re interested in the electric Chevy Bolt depreciation, Chevy Colorado depreciation, or Chevy Silverado depreciation rates, having all of the necessary information at a glance makes it easier to buy the right vehicles. 

If you’re interested in taking advantage of the 100% first-year bonus depreciation Chevy tax credits, new Chevy vehicles that qualify for this bonus include the following Chevy models: 

  • Blazer.
  • Colorado with the 2.8-liter engine and four-wheel drive.
  • Express cargo van.
  • Express Cutaway.
  • Express passenger van.
  • Low Cab Forward.
  • Silverado 1500.
  • Silverado 2500 HD.
  • Silverado 3500 HD.
  • Silverado HD chassis cabs.
  • Suburban.
  • Tahoe.
  • Traverse.

Vehicles that don’t qualify for this 100% purchase price depreciation but still qualify for depreciation up to $18,200 include the following models: 

  • Bolt EV.
  • Bolt EUV.
  • Camaro.
  • Colorado without the 2.8-liter engine and four-wheel drive.
  • Corvette.
  • Equinox.
  • Malibu.
  • Trailblazer.
  • Trax.

Whether you’re curious about Chevy Blazer depreciation, Chevy Traverse depreciation, or Chevy Cruze depreciation, this handy guide will help you better understand which vehicles qualify for the 100% bonus or those that can still save you money using current depreciation limits. 

Enlist the Help of #1 Cochran Chevrolet To Help You Find the Perfect Chevy Model for Your Business

Here at #1 Cochran Chevrolet, we are a trusted Chevy dealer with years of experience helping our customers find the perfect vehicle for work, fun, and beyond. You can choose to visit our dealership or use our convenient online inventory to find the model you want if you already have a clear understanding of what it is you need for your business. Beyond just your vehicle depreciation, you can also save money with our financing options, dedicated service center, and vehicle specials. 

Are you ready to take the next step in your business by purchasing reliable Chevrolet vehicles that will help you and your employees go the extra mile? If so, contact us now with any questions you may have about the vehicles we have in our online inventory or allow us to guide you along your car-buying journey so that you can find a vehicle that’s a perfect fit for your business operations!