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If you are a Michigan business owner planning to purchase a commercial vehicle in 2025, federal tax incentives such as the Section 179 deduction and bonus depreciation may help reduce your overall tax burden. These programs are designed to encourage businesses to invest in equipment and vehicles that support growth, efficiency, and day-to-day operations.
Rather than depreciating a vehicle slowly over multiple years, qualifying businesses may be able to deduct a significant portion of the purchase cost in the same year the vehicle is placed into service. This accelerated approach can improve cash flow and make budgeting for major purchases more predictable.
For qualifying CDJR commercial vehicles used primarily for business purposes, this can make upgrading your fleet or purchasing a work vehicle more financially efficient.
Section 179 of the IRS tax code allows eligible businesses to expense qualifying equipment, including certain trucks and commercial vans, in the year they are purchased and put into service. This provision helps businesses recover costs more quickly when investing in assets that support daily operations.
Instead of spreading depreciation across several years, Section 179 may allow the cost to be deducted upfront, subject to annual limits and eligibility requirements.
To qualify, the vehicle must be used more than 50 percent for business purposes during its first year. The allowable deduction amount depends on vehicle weight, classification, configuration, and documented business use.
The IRS adjusts Section 179 limits periodically to reflect economic conditions and business investment trends. For the 2025 tax year, these limits continue to support businesses that rely on commercial vehicles.
Key Deduction Limits
Eligibility Requirements
These limits apply to total qualifying equipment purchases for the year, not just vehicles. Businesses purchasing multiple assets should review how Section 179 applies across their full equipment portfolio.
Bonus depreciation works alongside Section 179 by allowing businesses to deduct a portion of remaining vehicle costs after the Section 179 deduction is applied. This can further reduce taxable income in the year the vehicle is placed into service.
For 2025, the bonus depreciation rate is 40 percent. This option may be especially helpful for larger fleet purchases or higher-cost commercial vehicles.
Bonus depreciation generally applies to both new and used qualifying vehicles, provided IRS requirements are met.
Why Bonus Depreciation Matters
Vehicle eligibility for Section 179 is largely determined by gross vehicle weight rating (GVWR) and how the vehicle is used for business purposes.
Vehicles Over 6,000 lbs GVWR
Vehicles over 6,000 pounds in gross vehicle weight rating (GVWR) may qualify for a full Section 179 deduction when used more than 50 percent for business. These vehicles are generally not subject to the same depreciation caps as lighter passenger vehicles.
Vehicles 6,000 lbs GVWR or Less
Vehicles with a GVWR of 6,000 pounds or less may still qualify for Section 179, but typically only for partial deductions due to IRS depreciation limits.
Common qualifying CDJR commercial vehicles may include:
In addition to vehicle weight and classification, the IRS outlines specific requirements that must be met to claim Section 179 and bonus depreciation.
Tax incentives like Section 179 and bonus depreciation can provide meaningful savings, but eligibility depends on your specific business structure and tax situation. State and federal tax treatment may differ for Michigan-based businesses.
The information provided here is for general educational purposes only and should not be considered tax advice. McFadden’s Friendly Motors recommends consulting a licensed tax advisor or CPA to confirm eligibility and compliance. Official guidance is available at irs.gov.
