Tax breaks for vehicle upgrades

Tax deductions for pickup accessories

By Robin Walton, CPA

So you already have your pickup, you are using it for your business, and you decide to do what a lot of guys do and customize it in some way such as mounting a winch on the front, install a toolbox and a bedliner, maybe even put graphics or lettering on the side to advertise your business.

Can you get any deductions on your tax return for these aftermarket accessories on your pickup?

The answer is – maybe!

Getting tax deductions for accessorizing your pickup isn’t a completely a cut and dry answer, because it depends on several things.  But most likely, there is a good chance you can save some tax dollars on these types of purchases.

One of the questions to ask yourself is does the accessory relate specifically to the operations of your business?

If you are a contractor and you install a toolbox, then that is definitely a business-related expense and would be deductible.  Just as a portable toolbox is part of the supplies for your business, so is a built-in box on your pickup.

So would a winch if it is used during the course of your work. But If the winch is only used when you are hunting and cutting wood then it would not be tax deductible.

There are some things, such as new tires, that may or may not be tax deductible depending on the IRS method you have chosen for your vehicle tax deduction.

For example, if you use the Standard Mileage Rate method, then you can’t deduct the cost of the tires because the IRS rate is basically intended to cover ongoing maintenance for your vehicle, such as tires.  In other words, tire expense is already included in the mileage rate.

However, if you use the Actual Expense method, then tires would qualify as a deductible item.  

As far as vehicle wraps or lettering on your pickup, if they include advertising for your business, then the cost of purchasing and installing these are deductible as an advertising expense.  This doesn’t mean that all expenses for your pickup are now 100% business-related however (just because you have your company name on the vehicle).

If you use the pickup for both personal and business use, having advertising on the vehicle doesn’t change the personal use into business – just something to keep in mind.

If you’re looking at an exhaust upgrade or adding tuners or programmers to your pickup, you need to get with your tax accountant and discuss whether these types of add-ons will be tax deductible for your business.  In general, the IRS allows a tax deduction for all business-related expenses – so you need to consider how that product installed on your pickup contributes to your business operations.

If you have already been accessorizing your pickup, or are considering it, and the accessories can be categorized as a business-related expense, odds are you can save some tax dollars.

Check out and/or get with your tax accountant to discuss your specific situation and see if that new truck cap qualifies as a tax deduction. Also, check our “Money Matters” in every issue of ProPickup for other money-saving tips and advice.