Buy a Vehicle This Year in Maine? Here’s How You Can Use it to Get Cash Back on Your Taxes

There's only two things in life that are certain. Death and taxes, right? I mean, that's what my grandfather always told me anyway.

However, there are different things you can do that will help you drastically reduce your tax burden each and every year. From student loan tax credits to the Homestead Exemption and business expenses, there are lots of trick in the tax code that are aimed at helping hard-working people reduce their annual tax burden.

Now, I'll admit, I'm super lucky. I have a CPA who is absolutely phenomenal and knows the US and Maine tax codes inside and out. He will literally call me up in the middle of preparing our taxes and ask crazy questions about deductions that I never would have thought of. No, I'm not giving you his name, he's all mine! (insert evil laugh here).

Anyway, one thing I've never done, is write off a vehicle, or partial vehicle, on my taxes. However, this year, my plan is to do just that. Because I'm a small business owner (Matt James Entertainment, weddings & corporate events), I qualify for some of the tax perks of a business owner.

If you run a small business you might, too! Even if you're using your car to drive Scentsy orders around or to Door Dash or you own a small contracting outfit. There are so many things that may qualify you!

I did have some questions about this, so I checked with my 'tax guy'. Now, because I use my truck a ton for my business to haul my gear trailer around, I do qualify. However, because I ALSO use my truck for some pleasure and commuting, I can't write the entire thing off.

The way it works? Well, it's all done through section 179 of the tax code. 179 allows for immediate deductions on things like computers, equipment, machinery and vehicles. But, if I use my truck for things other than business sometimes, how does it work?

Well, to simplify it, I can write off a percentage of the purchase price based on how much I use it for work. So basically, if I use my truck 50% of the time for business and 50% of the time for 'other stuff', I can write off 50% of the purchase price. Make sense?

If I spent $50,000 on the truck, I could write off $25,000 of the purchase price as a deduction against my overall taxable income. If it sounds confusing, don't worry, it is. I only know how to explain this because it's how it was explained to me.

So if you're taxable income was $100,000 for 2024, this deduction, using the example I provided, would reduce your tax liability to $75,000, likely giving you a nice little boost in your return.

The only catch? If you ever sell the vehicle, you have to claim the cash you got from the sale as taxable income later on down the road. However, you could avoid that by purchasing another vehicle. It's like a constant cycle, but one that could work well in your advantage.

And now you know why businesses like to buy so much new crap in December. Because of section 179. Ask your tax professional about it today!