Tags: business vehicle expense | tax deduction | mileage | fuel economy | safe driving

Lauren Fix, The Car Coach: 11 Ways to Save On Your Business Vehicle Expenses

Lauren Fix, The Car Coach: 11 Ways to Save On Your Business Vehicle Expenses

Lauren Fix By Monday, 14 November 2022 12:22 PM EST Current | Bio | Archive

If you manage a fleet of vehicles as part of your business, you will be well aware of how expensive it can be. As well as the costs of the vehicles themselves, you also have the added expenses of insurance, fuel, maintenance, spare parts, and staff training

Finding ways to reduce these costs can help you to manage your fleet more effectively, while also helping you to increase your profits and grow your business. It doesn’t matter whether you have a single company car or a fleet of vehicles, these tips will help you save money where it counts.

Keep track of your miles - As of 2022, the IRS's standard mileage rate for business mileage deductions is 58.5 cents ($0.585) from January 1 to July 30 and 62.5 cents ($0.625) from July 1 to December 31.

For 2022, you can claim $0.14 per mile driven for charity purposes. You can also take a deduction for the use of your vehicle for your real estate investment activities. That is calculated the same way you would if you were taking a deduction for your business. In order to take any form of business deduction for your car, you’ll have to calculate your percentage of business use.

Tracking how many business miles you had for the car and how many personal miles you had? This is quite likely the single most difficult part of the deduction. But it’s important if you want to take (and keep) a deduction for your vehicle.

There are a few rules you need to follow when you use the mileage method:

  • You must not operate five or more cars at the same time, as in a fleet operation,
  • You must not have claimed a depreciation deduction for the car using any method other than straight-line,
  • You must not have claimed a Section 179 deduction on the car,
  • You must not have claimed the special depreciation allowance on the car, and
  • You must not have claimed actual expenses after 1997 for a car you lease.
  • The other option is to use the actual expense method. In this case, you’ll get to take a deduction for the business percentage times the actual operating expenses for the vehicle. This includes gas, oil, repairs, tires, insurance, registration, license and depreciation. If you are leasing a vehicle, you can also use the business percentage times the lease costs. If you are financing, you can also take the business percentage times the interest cost.

    Note that if you take the actual expense deduction, you cannot go back to the mileage method in another year.

Section 179 and bonus depreciation allow you to take an immediate expense for certain vehicle that you purchase. These methods are only available if you are using the actual expense method and own the car.

The Section 179 allows for a $25,000 deduction for vehicles that are over 6,000 GVWR. Bonus depreciation can kick in after that to give you a full 100% deduction.

What Vehicles Qualify for the Section 179 Deduction in 2022?

The list of vehicles that can get a Section 179 tax write-off include:

• Heavy SUV’s, Pickups, and Vans that are more than 50% business-use and exceed 6000 lbs. gross vehicle weight can qualify for at least a partial Section 179 deduction, plus bonus depreciation.
• Obvious “work” vehicles that have no potential for personal use typically qualify.
• Delivery type vehicles, like a classic cargo van or box truck with no passenger seating, can qualify.
• Specialty “singular-use” vehicles generally qualify – a hearse, an ambulance, etc.

2022 Heavy Vehicles

To meet the weight criteria, the manufacturer’s gross vehicle weight rating (GVWR) must exceed 6,000 pounds.

Here’s a partial list of SUVs and Trucks that might qualify* for a tax deduction in 2022:

Audi Q7
BMW X5, X6
Buick Enclave
Cadillac XT5, XT6, Escalade
Chevrolet Silverado, Suburban, Tahoe, Traverse
Chrysler Pacifica
Dodge Durango, Grand Caravan
Ford Expedition, Explorer, F-150 and larger
GMC Acadia, Sierra, Yukon
Honda Pilot 4WD, Odyssey
Infiniti QX80, QX56
Jeep Grand Cherokee
Land Rover Range Rover, Discovery
Lexus GX460, LX570
Lincoln MKT AWD, Navigator
Mercedes-Benz G550, GLS, GLE, Metris, Sprinter
Nissan Armada, NV 1500, NVP 3500, Titan
Porsche Cayenne
Tesla Model X
Toyota 4Runner, Landcruiser, Sequoia, Tundra

Both new and used vehicles can qualify for Section 179 and bonus depreciation. You can finance a vehicle and still take the deduction.

Business Use and Recapture Danger

The numbers above assume 100% business use. If your business use percentage is less, than the amount you can deduct is less.

It is also important to realize that passenger automobiles and most other vehicles are “listed property” for which special rules apply. If the vehicle is not used more than 50 percent for business purposes, no section 179 or bonus depreciation deduction is allowed. Only straight-line depreciation can be taken. If you purchase a vehicle with Section 179 and use it less than 50%, this amount less than 50% usage will be taxed as ordinary income, subject to self-employment tax.

There is a lot to consider when you take an auto deduction. The more you know, the less you pay!

Save money on fuel

The price of fuel has skyrocketed in recent months, taking a toll on businesses who rely on multiple vehicles. For this reason, you need to be smart about how you refuel your fleet. Using a fuel card is the best way for organizations to save money in this area, as you will benefit from a fixed price that is closely linked to the wholesale fuel market.

You will also benefit from no interest charges, as well as finding it easier to manage the admin of VAT and invoicing. In addition, it is always advisable to pick the right place to refuel your company vehicles. Filling on the motorway might be more convenient, but it is almost always more expensive.

Educate drivers

How you drive directly affects the amount of fuel you consume, so you should ensure your staff are fully trained in fuel efficient driving techniques. There are many ways to be more conservative with the gas, including coasting rather than braking to decelerate, accelerating gently, and not leaving the engine idling when stationary. Although the benefits might seem minor, over time these good habits will add up into significant cost savings.

Fuel-efficient driving techniques

Fuel-efficient driving can save you hundreds of dollars in fuel each year, improve road safety and prevent wear on your vehicle. Adopt these 5 fuel-efficient driving techniques to lower your vehicle’s fuel consumption and carbon dioxide emissions by as much as 25%.

1.)  Accelerate gently

The harder you accelerate the more fuel you use. In the city, you can use less fuel by easing onto the accelerator pedal gently. To be as fuel-efficient as possible, take 5 seconds to accelerate your vehicle up to the speed limit from a stop. Imagine an open cup of coffee on the dashboard. Don’t spill it!

2.)   Maintain a steady speed

When your speed rises and falls constantly, you use more fuel, and spend more money, than you need to. Tests have shown that being consistent with your speed can increase your fuel use by 20%.

Consider using cruise control for highway driving, where conditions permit. Never use cruise control on ice, snow or when raining. Be mindful, coasting down a hill will save your money too.

3.)  Anticipate traffic

Look ahead while you’re driving to see what is coming up and keep a comfortable distance between your vehicle and the one in front of you. By looking closely at what pedestrians and other cars are doing, and assessing what they’ll do next, you can keep your speed as steady as possible and use less fuel. It’s also safer to drive this way.

4.)  Avoid high speeds

Keep to the speed limit and save on fuel! Most cars, vans, pickup trucks and SUVs are most fuel-efficient when they’re travelling between 50 and 80 miles per hour. Above this speed zone, vehicles use increasingly more fuel the faster they go.

5.)  Coast to decelerate

Every time you use your brakes, you waste your forward momentum. By looking ahead at how traffic is behaving, you can often see well in advance when it’s time to slow down. You will conserve fuel and save money by taking your foot off the accelerator and coasting to slow down instead of using your brakes.

6.)  10-Second Rule

If you are waiting in a drive through line, waiting on a customer or getting out of the vehicle for a delivery. Shut the vehicle off. You are getting zero miles to the gallon and wasting fuel.

7.)  Reduce unnecessary trips

The most effective way to cut your transport costs is to eliminate any unnecessary travel. The extent to which this is possible will depend on your business, but there are always ways to reduce your reliance on vehicles. If you are sending your staff across the country, get them to share a car rather than traveling separately. When arranging delivery logistics, see if you can combine multiple deliveries into one route. Carrying out a full audit of your company travel will help you to identify areas to cut costs.

8.)  Maintain vehicles regularly

Having your vehicles inspected and maintained can be pricey, the cost of dealing with a breakdown and the subsequent disruption can be far more expensive. Ensuring all transport vehicles undergoes a regular service will help you to identify and fix any issues before they become a problem. This way, you won’t have to deal with the fallout when one of your trucks breaks down in the middle of nowhere.

Save money with fleet discounts and websites like CarAdvise.com.

Get expected costs of repairs; RepairPal.com

9.)  Check your tire pressure every month

Driving a vehicle with tires under-inflated by as little as 8 psi can increase fuel consumption by up to 4%. It can also reduce the life of your tires by more than 6,000 miles. Find the right tire pressure for your vehicle on the tire information placard. It’s on the driver’s door. Use a dial or digital tire pressure gauge, it won’t take long but it will save you money on gas and tires.

10.)  Don’t carry unnecessary weight

Remove items such as salt, sand and extra equipment from your vehicle. The less it weighs, the less fuel your vehicle will use. The fuel consumption of a mid-size vehicle increases by about 1% for every 20 pounds of weight it carries.

11.)  Track your fuel consumption

How long can you go without filling your tank? Two weeks? A month?

Challenge yourself to refill as seldom as possible and your monthly costs will come down.

12.)  Plan ahead

Map out your route, especially if it’s long. Listen to traffic reports and avoid accidents, road construction and other trouble spots. Avoid roads that cut through major cities and are dotted with stoplights, intersections and pedestrians. Use four-lane highways when you can

13.)  Combine trips

Longer excursions let your vehicle’s engine warm up to its most fuel-efficient temperature.

Run your errands one after the other. Plan your route to avoid backtracking and rush-hour traffic.

14.)  More Right Turns than Left Turns

This is the same procedures used by UPS, Fed Ex, Postal Service. It does save on gas.

15.)  Gas Evaporates

Last year 147 million gallons of gasoline evaporated due to lose, missing or broken gas caps. Make sure its on tight and not damaged. Replacing it will not be expensive but costs you money if you don’t.

16.)  Memberships and Club Discounts

Gas companies, Club stores and business groups offer points and discounts for using their stations. Look online for discount programs. They all want your business and it will help you keep track of your costs.

17.)  Challenge yourself

Committed to saving money and shrinking your environmental footprint? Use this personal action plan to achieve your goals.

These are just a few of the ways business owners can save money on their business fleet. In 2022, with climate change an ever-growing threat, there is more burden on businesses to cut down on travel, but many companies have no choice.

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We will be reviewing all of the newest cars on our YouTube channel Car Coach Reports.

Additional articles on our website https://www.CarCoachReports.com

Lauren Fix, The Car Coach, is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.

Lauren is the National Automotive Correspondent for Newsmax TV, a conservative news net carried in 23 countries and in over 35 million U.S. cable/satellite homes. She is also The Weather Channel and Inside Edition’s auto expert. Lauren Fix serves as a juror for the esteemed North American Car & Truck of the Year Awards (NACTOY).

Lauren is The Car Coach columnist for Parade Magazine and eBay Motors and writes a weekly column. She also appears weekly on USA Radio’s DayBreak USA.
Lauren is the president and founder of Automotive Aspects, Inc., a consulting firm with a wide range of multi-media services, including media consulting, broadcast messaging strategy, public relations and television production.

Lauren is the author of three books: most recently, Lauren Fix’s Guide To Loving Your Car with St. Martins Press, Driving Ambitions: A Complete Guide to Amateur Auto Racing, and The Performance Tire and Wheel Handbook.

Lauren’s broadcast experience includes Oprah, Live! With Regis and Kelly, The View, TODAY, 20/20, The Early Show, CNN, FOX News, FOX Business, MSNBC, HLN, TBS Makeover and a Movie, Inside Edition, ESPN, TBS, Discovery, Speed and NPR, to name a few. Lauren previously hosted four seasons of Talk 2 DIY Automotive on the Do-It-Yourself Network (DIY), was the National Automotive Correspondent for Time Warner Cable and hosted Female Driven on Lifetime TV.

Lauren’s articles and advice have appeared in USA Today, Good Housekeeping, Redbook, eBay, Woman’s World, Esquire, First for Women, InTouch and Self. She has also contributed content to Motor Trend, Truck Trend, Hot Rod, Car Craft and many other automotive publications.

Lauren is a member of the Society of Automotive Engineers (SAE), the Society of Automotive Analysts (SAA) and is an ASE (Automotive Service Excellence) certified technician. She inherited her love of all things automotive from her father, who owned a brake remanufacturing business and worked for many U.S. manufacturers. Lauren has been fixing, restoring and racing cars since the age of ten. She has been advising drivers almost all her life.

In addition to being a leader in positive consumer awareness and the automotive industry, Lauren is often asked to speak to groups around the world about her success in marketing, motivation, entrepreneurship, parenting and other lifestyle topics.

Lauren was named the 2015 WIN Award, 2013 SEMA Business Network “Mentor of The Year”; SEMA Business Network 2012 Woman of the Year; and awarded various Car Care Council “Automotive Communications Awards” in 2012, 2013 and 2014. Past awards include 2008 Automotive Woman of The Year and 2010 Woman of Distinction – Entrepreneur winner. Lauren Fix was inducted into the National Women and Transportation Hall of Fame in 2009 – a very high honor for a hard working automotive professional.

© 2024 Newsmax Finance. All rights reserved.

If you manage a fleet of vehicles as part of your business, you will be well aware of how expensive it can be. As well as the costs of the vehicles themselves, you also have the added expenses of insurance, fuel, maintenance, spare parts, and staff training.
business vehicle expense, tax deduction, mileage, fuel economy, safe driving
Monday, 14 November 2022 12:22 PM
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