If you use a vehicle for business, the IRS lets you deduct the business use. Two methods. Pick one. The choice has real money behind it.
Standard mileage rate
You drive 15,000 business miles in a year. At 70¢/mile, that’s $10,500 of deduction. No receipts to track, no depreciation schedule, no math. You do need a mileage log (date, miles, business purpose) for each trip.
You can switch from standard to actual in a later year, but only for a vehicle where you used standard in year one. If you started with actual, you’re stuck with actual.
Actual expense method
Track all vehicle costs: gas, oil, repairs, tires, insurance, registration, depreciation, lease payments. Multiply by business-use percentage (business miles / total miles).
For an $80,000 SUV used 80% for business: lease payments, gas, insurance, maintenance, all multiplied by 80%, become deductible. Depreciation on a purchased vehicle is calculated separately (subject to the limits below).
The § 280F luxury auto cap
The IRS caps depreciation on regular cars and light trucks. For a passenger car placed in service in 2024, the limits are roughly $20,400 in year one (with bonus depreciation), $19,800 year two, $11,900 year three, $7,160 each year after. Over 27 years to fully depreciate an $80,000 car.
This cap is why the "heavy SUV" strategy exists.
The heavy SUV / truck loophole
Vehicles with a gross vehicle weight rating (GVWR) over 6,000 lbs are EXEMPT from the luxury auto cap. Crossovers, full-size SUVs, pickup trucks, vans, anything in that range. For 2024 you can § 179 expense up to $30,500 of the SUV in year one. With bonus depreciation on top, you can write off a much larger chunk in year one than a regular car allows.
The vehicle must be more than 50% used for business in the first year and through its useful life, or you have to recapture the deduction. And it has to be used in a trade or business (rental real estate is generally not § 179 eligible).
Lease vs buy
For a leased vehicle, you can’t depreciate (you don’t own it). You deduct the lease payments times business-use percentage. The IRS has a lease inclusion table that adds back a small amount for "luxury" leases over certain values, but the inclusion is generally modest.
Buying lets you take depreciation (potentially big in year one for a heavy SUV). Leasing lets you deduct the lease payment but limits the lifetime deduction. For a heavy SUV used in active business, buying often beats leasing. For a regular passenger car used by a business owner, lease can be cleaner.
Watch the personal use
If you take a vehicle home, drive it for personal trips, or let your spouse use it, that’s personal use and it reduces the business-use percentage. Drop below 50% business use after year one, and § 179 recapture kicks in. The personal use also creates a fringe benefit issue on the W-2 if the vehicle is corp-owned.