Sometimes spending money actually saves money. Seems counter-intuitive? Stay with us.
The Internal Revenue Service Tax Code offers a substantial tax deduction for purchasing business-use vehicles weighing between 6,000 and 14,000 lbs. (Gross Vehicle Weight Rating or GVWR). It’s called Section 179.
This would apply to the Mercedes-Benz Sprinter Cargo Van (2500, 3500, 3500 XD, 4500), Sprinter Crew Van, Passenger Van, and eSprinter. Of course, always make sure to account for the correct model year, trim level, and drivetrain, since those can affect the vehicle’s deductibility. The vehicle must have a Gross Vehicle Weight Rating (GVWR) of between 6,000 and 14,000 lbs.
Like most things in the tax code, Section 179 is complicated, so it’s always best to check with a tax professional before acting. But Investopedia defines Section 179 as a way to provide “an immediate expense deduction that business owners can take for purchases of depreciable business equipment instead of capitalizing and depreciating the asset over a period of time.”
Some Things to Know about Section 179
- The maximum deduction in a single tax year is $2.5 million; the phase-out threshold is $4 million.
- For passenger vehicles generally used on public roads with a GVWR of between 6,000 and 14,000 lbs., there is a “heavy SUV cap” of $32,000.
- There may be a difference in how the tax code treats SUVs, pickups, and vans. Best to consult your tax specialist to know what these differences/exceptions are.
- The vehicle has to be able to be verified as being used 50% or more of the time for business – not personal – purposes.
- It’s wise to keep good records, including a photo of the GVWR label, mileage logs or another reliable tracking method, and notes on how the vehicle is actually used, because it may affect deductibility.
Knowing that Section 179 could reduce your business’s taxes in 2026 might make purchasing a new Mercedes-Benz van an attractive idea, even though it means spending to save. Of course, it’s always a good idea to check with your tax advisor before making any big business purchase.
If you’ve been meaning to expand or replace your business vehicles, now might be the time. Mercedes-Benz of Farmington client advisors would be happy to help you find just what you need.