BMW Models that Qualify for Section 179 Tax Deduction
Does Your BMW Qualify for Section 179 Tax Deduction?
Are you the proud owner of a 2023 BMW X5, X6, or X7 in the Topeka or Kansas City area? Since all three of these models have a Gross Vehicle Weight RATING (GVWR) exceeding 6,000 pounds, they may be eligible for full depreciation during the first year of ownership – if used for business purposes exclusively. Buying an X5, X6, or X7 could possibly offer significant tax advantages compared to other similarly priced luxury sedans on the Lawrence market. Find out more about Section 179 tax deduction and the depreciation of each of these brand-new BMW vehicles with the experts at BMW of Topeka below!
What is a Section 179 Tax Deduction?
Section 179 of the IRS Tax Code allows businesses to write off the complete purchase price of any qualifying piece of software or equipment in the year it was purchased or financed. For example, if a business financed $50,000 worth of equipment in 2021, it can deduct the entire $50,000 from its 2021 taxable income. This deduction can help small and medium-sized businesses reduce some of the financial burden associated with acquiring a lot of software or equipment. This deduction can also incentivize small business owners to act quickly at the end of a tax year.
BMW X5, X6, & X7 Tax Depreciation Comparison
Our BMW of Topeka finance experts have provided three comparisons below that break down the tax depreciation advantages for business owners who invest in a new BMW X5, X6, or X7 before January 1st, 2023. However, you’ll want to get in touch with your tax professional to determine how this information can best be applied to your individual financial circumstances:
Total Allowable Depreciation Between BMWs and Similarly Priced Luxury Cars
2023 BMW X5 ($66,570 MSRP) vs. 2023 Luxury Car ($66,570 MSRP): |
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| Total allowable depreciation for 1st year of ownership* | ||
| BMW X51 100% Depreciation $66,750 |
VS | Luxury Car2 28.5% Depreciation $19,200 |
Under these circumstances, your business could deduct 100% of the X5 cost (a $66,570 Tax Deduction for Your Business), but your business can’t even deduct the normal 27% 1st-year deduction on the luxury sedan because that amount is CAPPED at $19,200. You can only claim a maximum of $19,200.
2023 BMW X6 ($78,300 MSRP) vs. 2023 Luxury Car ($78,300 MSRP): |
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| Total allowable depreciation for 1st year of ownership* | ||
| BMW X61 100% Depreciation $78,300 |
VS | Luxury Car2 24.5% Depreciation $19,200 |
In this scenario, your business could deduct 100% of the X6 cost (a $78,300 Tax Deduction for Your Business), but your business can’t even deduct the normal 27% 1st-year deduction on the luxury sedan because that amount is CAPPED at $19,200. So instead of $21,100 as a 1st-year depreciation deduction, you can only claim a maximum of $19,200.
2023 BMW X7 ($92,600 MSRP) vs. 2023 Luxury Car ($92,600 MSRP): |
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| Total allowable depreciation for 1st year of ownership* | ||
| BMW X71 100% Depreciation $92,600 |
VS | Luxury Car2 21% Depreciation $19,200 |
In this situation, your business could deduct 100% of the X7 cost (a $92,600 Tax Deduction for Your Business), but your business can’t even deduct the normal 27% 1st-year deduction on the luxury sedan because that amount is CAPPED at $19,200. So instead of $25,000 as a 1st-year depreciation deduction, you can only claim a maximum of $19,200.
Save Big When You Shop at BMW of Topeka
As you can see, it is essential to understand the benefits of Section 179 as the year comes to a close, so your business can properly evaluate your upcoming needs. Thinking of purchasing an all-new BMW X5, X6, or X7 for your small or medium-sized business? Then you’ll want to contact us at BMW of Topeka to get the purchasing process started as soon as possible!
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.
*Comparisons based on Section 179 and 168(k) of the Internal Revenue Code, which allows for additional first year depreciation for eligible vehicles and reflects figures for owners who purchase vehicles for 100 percent business use and place vehicles in service by January 1, 2023.
1BMW X5/X6 shown fully depreciated in Year One.
2Luxury car depreciation can continue year two at $18,000, year three at $10,800, and subsequent years at $6,460 until the vehicle is fully depreciated or sold.
**With Gross Vehicle Weight Ratings (GVWR) of more than 6,000 pounds, these BMW 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.
†Comparisons based on Section 179 and 168(k) of the Internal Revenue Code, which allows for additional first year depreciation for eligible vehicles and reflects figures for owners who purchase vehicles for 100 percent business use and place vehicles in service by January 1, 2023.