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Can I Purchase a Car Through My Business?

Can I Purchase a Car Through My Business?

Business Vehicles in 2023: Evaluating the Investment

The Quick Question that runs near the top of our list every year? Can I buy a vehicle through my business and get the tax break?

As business landscapes shift, the allure of purchasing a vehicle under your company's name, especially given the potential tax advantages, becomes an appealing consideration. This article will guide you through key factors to ensure the decision aligns with your business objectives.

Is a Vehicle Integral to Your Business?

Determine the true necessity of a company vehicle. If your operations center around services like home healthcare or onsite construction/landscaping, the justification for a dedicated vehicle is clear. Conversely, if your business operates predominantly online or involves meetings outside your premises, using your personal vehicle and tracking mileage for reimbursements might be a more efficient choice.

Assessing Business vs. Personal Mileage

If you're leaning towards buying a business vehicle, it's crucial to estimate the mileage split between business and personal use. This distinction is vital since deductions related to the vehicle are proportional to its business use. But estimating it at the time of decision does NOT let you off the hook for keeping a mileage log. Maintain a thorough mileage log, documenting business-related trips for optimal tax benefits.

Uncovering the True Cost of Ownership

While the purchase price is a significant factor, there are ongoing costs to consider:

  • Fuel consumption

  • Mandatory commercial insurance

  • Licensing and registration

  • Regular maintenance

  • Parking or storage fees

Balancing these costs against the potential tax benefits is essential for an informed decision.

Deciphering IRS Guidelines

Navigating IRS regulations is crucial. Key considerations include:

  • Deductions must correspond with business use percentages

  • The section 179 deduction, while alluring, has an annual cap of $1,080,000

  • Business-related vehicle expenses can be claimed in the year they're incurred

  • Depreciation limits apply to vehicles weighing over 6,000 lbs

  • Detailed mileage logs are indispensable for supporting deductions

Proper Vehicle Registration

If you do decide to make the purchase in the name of your business, register the car under your business's name, and designate it as a commercial vehicle. Since personal auto insurance won't suffice, acquiring a commercial policy is crucial.

Engage Expert Guidance

Given the complexity of tax regulations and the unique nature of every business, consulting a tax professional can provide clarity. Their expertise ensures that your decisions are both advantageous and compliant.


Purchasing a business vehicle offers potential advantages, but the decision should be rooted in a comprehensive evaluation of costs, benefits, and business needs. Thoroughly analyze your operations, consult with professionals, and make an informed choice tailored to your business's trajectory.

If you have questions, we can help…send us a message and we’ll line up an appointment to keep you traveling smoothly down a sometimes crowded and bumpy tax code road!

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