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Deducting Car and Truck Expenses
Deducting Truck and Car Expenses
Donald J. Breece, Farm Management Specialist, OSU Extension
The actual cost of operating a car or truck for a business can be deducted, either by using a standard mileage rate or actual expenses. Expenses include such items as gasoline, oil, repairs, license tags, insurance, and depreciation (subject to certain limits).
The standard mileage rate can not be used if the business operates more than five vehicles at the same time. The mileage rate was $.485 for 2007 and is $.505 per business mile for 2008.
A farm business can claim up to 75% of the use of a car or truck as business use without any travel records if it is used during most of the business day directly in connection with the business of farming. The selection of this method must be made the first year the vehicle is placed in service. Once the choice is made, it may not be changed to another method later. If a person keeps records of business use, more than 75% of business use may be claimed as a business expense.
Vehicles under 6,000 pounds GVW are subject to limitations for depreciation (including Section 179 deduction). These limits are $3060 in 2007 for a passenger automobile and $3260 for a light truck or van. For heavier SUV’s (between 6000 & 14,000 pounds GVW) the Section 179 is limited to $25,000, with the excess cost depreciable under MACRS rules. Heavier pick-up trucks (over 6000 pounds GVW) are not limited to depreciation and Section 179 Expensing amounts.
