What this calculator does
This tool determines the first-year tax write-off and net out-of-pocket cost for purchasing a heavy vehicle for business use. It is designed for business owners, independent contractors, and S-Corp shareholders who are considering buying a vehicle with a Gross Vehicle Weight Rating (GVWR) of over 6,000 pounds—often referred to in tax circles as the "G-Wagon deduction."
By inputting the vehicle's purchase price, your estimated percentage of business use, and your federal and state tax brackets, the calculator computes your maximum allowable Section 179 expensing cap alongside available bonus depreciation. The output provides a clear breakdown of your total first-year deduction and the actual cash you save on your tax bill.
How the math works
The calculator models the intersection of the Section 179 expense deduction and Bonus Depreciation as defined by IRS Publication 946 and reported on IRS Form 4562. These figures are strictly calibrated to the 2026 tax year.
First, it multiplies the vehicle's total purchase price by your business-use percentage to find the depreciable business basis. For heavy SUVs (vehicles with a GVWR between 6,000 and 14,000 lbs), the Section 179 deduction is legally capped at $30,500 for the first year. The calculator applies this limit automatically. Heavy cargo trucks and vans over 6,000 lbs with specific cargo bed lengths are exempt from this cap and can expense 100% of the cost under Section 179.
After subtracting the Section 179 amount, any remaining business basis is subjected to the selected bonus depreciation rate. The total first-year write-off is the sum of the Section 179 deduction and the bonus depreciation. Finally, this total deduction is multiplied by your combined federal and state tax rate to show the actual cash reduction in your tax liability.
Worked example
Let's say a business owner in the 37% federal tax bracket (with a 9.3% state tax rate) purchases a new Mercedes G63 AMG for $185,000. They anticipate using the vehicle 85% of the time for business purposes and 15% for personal use. They also opt to apply 100% bonus depreciation.
- Depreciable Business Basis: The $185,000 price multiplied by 85% business use equals a $157,250 business basis.
- Section 179 Deduction: Because the G-Wagon is classified as a heavy SUV, the deduction is capped at $30,500.
- Remaining Basis: $157,250 minus the $30,500 cap leaves $126,750.
- Bonus Depreciation: At a 100% rate, the entire remaining $126,750 is deducted.
- Total Year 1 Write-Off: $30,500 + $126,750 equals $157,250.
- Total Cash Saved: Multiplying the $157,250 deduction by the combined 46.3% tax rate yields $72,807 in tax savings.
By leveraging these provisions, the effective net cost of the $185,000 vehicle is reduced to $112,193.
Frequently Asked Questions
No, but you must use it for business more than 50% of the time to qualify for Section 179 and bonus depreciation. The deduction is prorated based on your actual business use percentage.
If your business use falls to 50% or below during the vehicle's recovery period, you will be subject to depreciation recapture. This means you must report a portion of the previous deduction as ordinary income.
Yes. Both new and used vehicles qualify for the Section 179 deduction and bonus depreciation, provided they are new to you and purchased from an unrelated party.
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Disclaimer: Calculations, projections, and simulation models provided on Core-AI are generated algorithmically for educational and scenario analysis only. Core-AI does not provide certified financial, legal, tax, or medical advice and assumes no legal responsibility for errors, omissions, or financial losses resulting from the use of these tools. Consult a licensed CPA, attorney, or physician for professional advice. Figures reflect 2026 tax year limits.