Did You Know You Could Turn Your Personal Car into a Business Tax Deduction?
If you drive a personal vehicle, there’s a powerful new tax opportunity coming your way in 2025—thanks to the One Big Beautiful Bill Act (OBBBA).
This new legislation reinstates 100% bonus depreciation, which opens the door for business owners to take a major deduction simply by converting a personal-use vehicle to business use.
The best part?
It’s a “no new cash outlay” deduction—meaning you don’t have to buy anything new to qualify.
🧮 How It Works
When you convert your personal vehicle to business use, the IRS treats it as if you “placed it in service” on the date of conversion.
That means you can deduct the vehicle’s fair market value (FMV) based on how much you use it for business.
With OBBBA restoring 100% bonus depreciation, you can write off the entire business-use portion of that FMV in the same year.
Example:
Let’s say your car is worth $31,000, and you start using it 70% for business in 2025.
You could deduct $21,700—even though you didn’t spend a single new dollar!
🚙 Which Vehicles Qualify?
- Heavy SUVs, pickups, and vans with a Gross Vehicle Weight Rating (GVWR) over 6,000 pounds qualify for full bonus depreciation.
- Smaller vehicles are subject to the “luxury auto” limits—but you can still deduct up to $20,200 in the first year.
This makes OBBBA a huge win for service-based business owners, contractors, consultants, and anyone who uses a vehicle regularly for business operations.
⚠️ Important Rules to Keep in Mind
Before claiming this deduction, be aware of these key guidelines:
- Use the lower of the vehicle’s fair market value or adjusted basis at the time of conversion.
- Section 179 expensing doesn’t apply to converted assets—but bonus depreciation is automatically applied unless you opt out.
- If you opt out, it applies to all assets in the same depreciation class—you’re either all in or all out.
- When you sell the vehicle, your basis for gain or loss will change depending on how depreciation was handled.
💰 Why This Strategy Matters
This is a powerful way to deduct the cost of an existing asset—without spending a dime in new money.
For business owners who already use a personal vehicle to meet clients, deliver products, or handle operations, this deduction could mean thousands of dollars in savings on your 2025 tax return.
It’s also a great example of how smart tax planning helps you maximize deductions you might otherwise miss.
🧭 What To Do Next
Before you convert your personal vehicle for business use:
- Document your business-use percentage clearly.
- Confirm the FMV at the time of conversion.
- Consult your CPA to ensure the deduction fits your overall tax strategy and depreciation plan.
✅ Bottom Line
The One Big Beautiful Bill Act gives small business owners another valuable opportunity to save—by turning personal assets into powerful tax deductions.
Make sure you’re ready to take advantage of it in 2025.
📞 Ready to Put This Strategy to Work?
Don’t miss out on this deduction!
Our team helps online entrepreneurs and eCommerce business owners maximize their tax savings, simplify their finances, and keep more of what they earn.
👉 Book a Tax Strategy Call to see how this vehicle conversion strategy—and other tax-saving moves—can help you reduce your 2025 tax bill.