Personal vs. Business Vehicles: What the IRS Actually Cares About

Before we get into the specifics of deductions, let's clear up a common misunderstanding. The IRS doesn't care whether you bought a truck or a sedan, or whether it's new or used. What matters is how you use the vehicle.

Why Your Daily Driver Isn't Tax Deductible

If you bought a car to drive to your job in Roanoke, run errands on weekends, and take family road trips—that's personal use. The IRS considers this a personal expense, just like buying clothes or furniture. You can't deduct it.

Even your daily commute doesn't count as a business expense. Driving from your home in Pulaski to your workplace in Radford is considered personal transportation, according to IRS Topic 510.

There is one small exception: if you itemize deductions on your federal return, you may be able to deduct the state sales tax you paid on the vehicle. In Virginia, that's 4.15% plus local fees. But for most people, the standard deduction works out better than itemizing.

When a Vehicle Becomes a Business Expense

A vehicle qualifies for business deductions when you use it primarily for business purposes. The IRS sets the bar at more than 50% business use. That means if you drive 20,000 miles in a year, at least 10,001 of those miles need to be for business.

What counts as business use? Here are some examples we see from customers in our area:

If any of these sound like you, keep reading. You may be leaving money on the table at tax time.

Section 179: The Big Deduction for Work Trucks

If you're a business owner who needs a truck, Section 179 is worth understanding. It allows you to deduct the full purchase price of a qualifying vehicle in the year you buy it, rather than spreading the deduction over several years through depreciation.

How Section 179 Works

Under Section 179, businesses can deduct the cost of certain property (including vehicles) as an expense instead of capitalizing it. For 2024, the maximum deduction is $1,160,000, though this begins to phase out when total equipment purchases exceed $2,890,000.

To qualify, the vehicle must be:

• Purchased (not leased) during the tax year
• Put into service during the same tax year
• Used more than 50% for business purposes
• Used in your trade or business (not held for investment)

Which Trucks Qualify for Full Section 179 Deductions

Here's where it gets interesting for truck buyers. Vehicles with a Gross Vehicle Weight Rating (GVWR) over 6,000 pounds can qualify for the full Section 179 deduction. Many popular full-size trucks meet this threshold.

At Duncan Suzuki, we carry several used trucks that typically qualify:

SUVs over 6,000 lbs also qualify, but they're capped at $28,900 for Section 179 purposes (2024 limit). Trucks don't have this cap, which is one reason many Roanoke-area business owners prefer them.

Bonus Depreciation: Another Option to Consider

In addition to Section 179, there's another deduction called bonus depreciation. You can sometimes use both together, though the rules get complicated.

What Bonus Depreciation Offers

Bonus depreciation allows you to take an additional first-year depreciation deduction on qualifying property. Unlike Section 179, there's no income limit—which can benefit businesses with fluctuating profits.

However, the bonus depreciation percentage has been declining:

• 2023: 80%
• 2024: 60%
• 2025: 40%
• 2026: 20%
• 2027 and after: 0% (unless Congress extends it)

Section 179 vs. Bonus Depreciation

Which option works better depends on your specific tax situation. This is one area where a CPA familiar with small business taxes can really pay for themselves.

Mileage Rate vs. Actual Expenses: Two Ways to Deduct Vehicle Costs

Even if you don't take Section 179 or bonus depreciation, you can still deduct ongoing vehicle expenses if you use your car or truck for business. The IRS gives you two methods to choose from.

Standard Mileage Rate

This is the simpler option. You multiply your business miles by the IRS standard mileage rate. For 2024, that rate is 67 cents per mile (always verify the current rate at IRS.gov).

So if you drove 15,000 business miles in a year, your deduction would be $10,050 (15,000 × $0.67).

The catch: if you've already claimed depreciation on the vehicle using the actual expense method, you generally can't switch to the standard mileage rate for that vehicle.

Actual Expense Method

With this method, you track all your actual vehicle costs: gas, insurance, repairs, oil changes, registration fees, and depreciation. Then you multiply the total by your business use percentage.

For example, if your total vehicle expenses were $8,000 and you used the truck 75% for business, you could deduct $6,000.

This method requires more record-keeping, but it can result in a larger deduction—especially if you drive an expensive vehicle that doesn't get many miles.

If you go with the actual expense method, keeping good records is a must. That includes saving receipts for repairs and maintenance. Our service department provides detailed invoices that work well for this purpose.

Who Qualifies? Common Situations in Southwest Virginia

Tax rules can feel abstract until you see how they apply to real situations. Here's how vehicle deductions might work for different workers in the Roanoke and New River Valley region.

Construction Contractors

A general contractor based in Roanoke who drives a Silverado 1500 to job sites throughout the valley might use the truck 80% for business. Between hauling tools, picking up materials from suppliers in Salem, and meeting with clients, most miles are business-related. This contractor could potentially qualify for Section 179 on a truck purchase or deduct ongoing expenses using either the mileage rate or actual expenses.

Farmers and Agricultural Workers

Farming operations in Pulaski County and Floyd County often require heavy-duty trucks. Driving between fields, hauling equipment, picking up feed and supplies, and taking livestock or produce to market all count as business use. Farm income is reported on Schedule F, and vehicle expenses can be deducted as farm business expenses.

Real Estate Agents

Real estate agents in the Roanoke metro area drive constantly—showing properties, meeting clients, attending inspections, putting up signs. Most of these miles qualify as business use. Many agents prefer the standard mileage rate because it's easier to track than saving every gas receipt.

Delivery and Rideshare Drivers

If you drive for DoorDash, Uber, or make deliveries for a local business, those miles are generally deductible. Keep a mileage log (apps like MileIQ or Everlance make this easier) and track your business miles separately from personal driving.

Small Business Owners

Whether you run an HVAC company in Radford, a landscaping business in Blacksburg, or a plumbing operation in Pulaski, your work vehicle likely qualifies for deductions. The key is documenting business use and keeping it above that 50% threshold.

IRS Rules You Need to Know

Before you start planning a big deduction, make sure you understand the rules. The IRS has specific requirements, and falling short can mean losing your deduction—or worse, facing an audit.

The 50% Business Use Test

To claim Section 179 or the standard mileage rate, your vehicle must be used more than 50% for business. If business use drops to 50% or below, you may have to "recapture" (pay back) some of your deduction in future years.

What counts as business use:

• Driving to meet clients or customers
• Traveling between work locations
• Picking up supplies or materials
• Making deliveries

What doesn't count:

• Commuting from home to your regular workplace
• Personal errands
• Vacation travel

Record-Keeping Requirements

The IRS expects you to keep records that support your deduction. For vehicle expenses, this typically means:

• A mileage log showing date, destination, business purpose, and miles driven
• Receipts for actual expenses (if using that method)
• Documentation of total miles driven during the year
• Records showing the purchase price and date of the vehicle

Keep these records for at least three years after filing your return. If you claim depreciation, keep them for three years after the depreciation period ends.

Luxury Vehicle Limits

Passenger vehicles (cars and light trucks under 6,000 lbs GVWR) have annual depreciation limits. For 2024, the first-year limit is $12,200 ($20,200 with bonus depreciation). These limits don't apply to vehicles over 6,000 lbs—another reason why full-size trucks like the Ford F-150 and Ram 1500 are popular with business owners.

Virginia Tax Considerations

Federal deductions get the most attention, but your vehicle purchase also affects your Virginia state taxes.

Virginia Sales Tax on Vehicles

Virginia charges a 4.15% Motor Vehicle Sales and Use Tax on vehicle purchases, plus various local and regional fees. When you buy a truck at our Pulaski location, these taxes and fees are included in your total purchase price.

If you itemize deductions on your federal return, you may be able to deduct this sales tax. However, most taxpayers get a better deal from the standard deduction.

How Federal Deductions Affect State Taxes

Virginia's income tax calculation starts with your federal adjusted gross income. So when you claim Section 179 or other deductions on your federal return, it generally reduces your Virginia tax liability too.

Virginia's income tax rates range from 2% to 5.75%, so the state tax savings from a vehicle deduction can add up—though they won't be as large as the federal savings.

Timing Your Purchase

If you're planning to claim Section 179, timing matters. The vehicle must be purchased AND put into service during the tax year. Buying a truck on December 28 and using it for business on December 30 counts for that year. Buying it on December 28 but not using it until January 3 means you'll claim the deduction the following year.

For more on timing your purchase, read our guide on the best time to buy a used car in Virginia.

Using Your Tax Refund for a Vehicle Purchase

Maybe you're not looking to claim a deduction—you just want to use your tax refund to buy a car. That's a smart move too.

Tax Refunds as Down Payments

The average federal tax refund runs over $3,000. That's a solid down payment on a quality used truck. A larger down payment means:

• Lower monthly payments
• Less interest paid over the loan
• Better financing terms
• More negotiating flexibility

When to Shop

Tax refunds typically arrive from February through April. February can be a great time to buy—dealerships are slower after the holidays, and you'll face less competition from other buyers. By late March, more shoppers have their refunds, which increases demand.

We serve customers throughout the tax refund season at Duncan Suzuki. Whether you're coming from Roanoke, Radford, Blacksburg, or Bluefield, WV, our team can help you find a vehicle that fits your budget.

Getting Pre-Approved

Don't wait until your refund hits your bank account to start shopping. Get pre-approved for financing now so you know your budget. When your refund arrives, you can use it to increase your down payment and lock in the vehicle you want.

Working With a Tax Professional

This article covers the basics, but tax law has more exceptions and special cases than we can address here. A good CPA or tax advisor can help you:

• Determine which deductions you qualify for
• Calculate the best method for your situation (Section 179 vs. depreciation vs. mileage rate)
• Handle the paperwork correctly (Form 4562 for depreciation, Schedule C for self-employment, etc.)
• Avoid mistakes that trigger audits
• Plan purchases to maximize tax benefits

The cost of professional tax preparation often pays for itself in deductions you might have missed—and peace of mind that everything is done right.