If you’re a business owner looking to maximize your savings on a new Land Rover, consider the potential benefits made available by Sections 179 and 168(k) of the IRS tax code. Choosing a new vehicle like the Range Rover, Range Rover Sport, Range Rover Evoque, Range Rover Velar, Defender 90, Defender 110, Defender 130, or Discovery instead of a luxury sedan can be a smart decision that provides plenty of advantages not only for you but for your business as well. There have been a number of updates for the new tax year which we’ll explain in greater detail below.
Section 179 of the IRS tax code allows businesses to deduct the price of qualifying equipment, such as vehicles, purchased or financed during the tax year. The Internal Revenue Service breaks down the list of vehicles that qualify for Section 179 deduction into three primary groups: Light, Heavy, and Other.
Several Land Rover SUVs meet the requirements of the “Heavy” category – which is defined as vehicles with a GVWR (gross vehicle weight rating) over 6,000 pounds, but not more than 14,000 pounds. These models include Range Rover, Range Rover Sport, Range Rover Evoque, Range Rover Velar, Defender 90, Defender 110, Defender 130, and Discovery (certain trim levels, GVWR may vary).
For the 2024 tax year, Section 179 allows for a maximum depreciation of $30,500 for “Heavy” vehicles in the current tax year, provided the vehicle is bought and put into service before January 1, 2025, and also meets certain other conditions below:
Additionally, Section 168(k) allows for additional “Bonus Depreciation” amounting to 60% of the purchase price of a select Range Rover, Range Rover Sport, Range Rover Evoque, Range Rover Velar, Defender 90, Defender 110, Defender 130, or Discovery through the end of 2024. When added to the $30,500 from Section 179, this can deliver a dramatic first-year depreciation tax deduction for certain luxury SUVs purchased in 2024. But starting in 2025, the allowable bonus depreciation percentage will decrease to 40%, meaning this tax benefit will be less impactful next year.
|
Depreciation Example |
“Heavy” Section 179 |
“Light” Section 179 |
|---|---|---|
| 2024 IRS Section 179 Maximum 1st Year Depreciation |
$30,500 | $12,500 |
| Section 168(k) Bonus Depreciation | 60% of Purchase Price | Capped at $8,000 for Luxury Vehicles |
| Qualifying Vehicles | New & Used | New & Used |
|
Example Vehicle |
Range Rover Sport |
Competitor Luxury Sedan |
| Purchase Price | $90,525 | $90,525 |
| First Year Section 179 Maximum Depreciation | $30,500 | $12,400 |
| First Year Section 168(k) Bonus Depreciation | $54,315 | Capped at $8,000 |
| Total 1st Year Depreciation | $84,815 | $20,400 |
Additional 1st Year Depreciation for “Heavy” Section 179
|
$64,415 | – |
Individual tax situations may vary. The information presented was accurate at time of publishing. Federal rules and tax guidelines are subject to change. Consult your tax advisor for complete details on rules applicable to your business.
**With Gross Vehicle Weight Ratings (GVWR) of more than 6,000 pounds, these select models are classified as “Heavy SUVs”. Gross Vehicle Weight Rating (GVWR) is the manufacturer’s rating of the vehicle’s maximum weight when fully loaded with people and cargo.
**REMINDER: If you have any questions, be sure to contact your tax professional for exact recommendations and rules related to Section 179 and vehicle eligibility.**
Luxury car depreciation can continue year two at $19,800, year three at $11,900, and subsequent years at $7,160 until the vehicle is fully depreciated or sold.
*Comparisons based on Section 179 and 168(k) of the Internal Revenue Code, which allows for additional first year depreciation for eligible “Heavy” vehicles and reflects figures for owners who purchase vehicles for 100 percent business use and place vehicles in service by January 1, 2025.
