Can an LLC Write Off a Car Purchase? The 2025 Guide

For many small business owners, buying a vehicle isn’t a casual decision about transportation—it’s a significant investment that can directly impact cash flow and tax planning. 

The big question is: Can an LLC write off a car purchase? 

The answer is yes, but the path to maximizing this deduction requires careful planning, strict compliance with IRS rules, and a long-term strategy.

This guide walks through the deduction methods, depreciation strategies, and compliance requirements you need to know in 2025. Whether you’re considering a work truck, sedan, or leased vehicle, the right approach could unlock significant tax savings.

Key Highlights

• LLCs can write off a car purchase, but the method you choose—standard mileage vs. actual expenses—sets the foundation for your deduction strategy.

• Section 179 and bonus depreciation allow substantial first-year write-offs, especially for vehicles over 6,000 pounds.

• Correct titling under your LLC provides liability protection and ensures car expenses are deductible.

• Strict IRS record-keeping requirements—mileage logs, receipts, and business expense tracking—are critical for audit-proof deductions.

• Common pitfalls, such as the commuting rule, claiming 100% business use, and depreciation recapture, can trigger penalties if not appropriately managed.

• Partnering with experts like 1-800Accountant, America's leading virtual accounting firm, ensures your deduction strategy fits into a broader financial plan.

Making the Actual Expenses vs. Standard Mileage Decision

Before diving into depreciation rules and tax benefits, LLC owners must decide between two IRS-approved deduction methods. This choice often has the biggest impact on overall savings.

Standard Mileage Method: Simplicity and Predictability

For 2025, the IRS standard mileage rate is 70 cents per mile, up from 67 cents in 2024. This single rate covers gas, maintenance, insurance, and depreciation. You can still deduct tolls and parking fees separately.

This method works best for:

• Owners who drive high business mileage in a relatively low-cost vehicle.

• Businesses that want predictable, simplified record-keeping.

Actual expense method: More complex but potentially higher deductions

The actual expense method allows you to deduct costs like:

• Fuel and oil

• Insurance premiums

• Repairs and maintenance

• Tires and registration fees

• Loan interest and lease payments

• Depreciation

This method often results in higher deductions for expensive vehicles, trucks, or SUVs with high maintenance costs, with depreciation being a significant component. 

The "no-turning-back" rule for a vehicle

Once taxpayers choose the actual expense method for a vehicle, they cannot switch back to the standard mileage method in later years. Because this is a long-term commitment, strategic vehicle tax planning and tax advisory from a CPA, EA, or accounting professional is crucial.

The tax pro you select should be able to project the real-dollar impact of using Section 179 vs. bonus depreciation, based on mileage deduction expectations and vehicle cost.

Save More by Using Depreciation, Section 179, and Bonus Depreciation

Vehicle depreciation is where LLC owners can unlock the most considerable tax savings, moving beyond simple expense tracking. 

Understanding Vehicle Depreciation

Depreciation spreads the cost of a vehicle across its useful life. But the IRS allows accelerated methods—like the Section 179 deduction and bonus depreciation deduction—that can front-load deductions.

Importantly, once you claim depreciation, you’re locked into the actual expense method.

Section 179 and writing off a vehicle in year one

Section 179 lets you deduct the full or partial purchase price of a vehicle in the year it’s placed in service, provided it’s used at least 50% for business.

Select the correct vehicle by weight and deduction limits

Deduction limits are based on a vehicle's weight. 

• Light vehicles (under 6,000 lbs.) have capped first-year deductions.

• Heavy vehicles (over 6,000 lbs.) can often qualify for much higher write-offs, making them a strategic purchase choice.

• Specialized/Vocational vehicles may qualify for the full deduction.

How to make the most of bonus depreciation

Thanks to the One Big Beautiful Bill Act (OBBB), passed in July 2025, 100% bonus depreciation is permanently restored. That means qualifying vehicles can be written off in full, even beyond Section 179 limits.

This makes 2025 a powerful year to purchase vehicles for business use. But proper modeling is key to ensuring your deductions align with projected business income.

Ownership and Structure: Strategic and Legal Considerations

LLC Ownership vs. Personal Ownership

Titling the vehicle under your LLC provides liability protection, shielding personal assets from business-related lawsuits. By contrast, personally owned vehicles require reimbursement arrangements, which can complicate deductions.

Practicalities of an LLC vehicle purchase

Business loans are common, but may require a personal guarantee. A professional can help prepare the necessary financial documents to ensure a smooth process.

• Title the vehicle in the LLC’s name.

• Use a business bank account or a loan for the purchase.

• Be prepared to provide a personal guarantee if financing.

Making the lease vs. purchase decision

While leasing can be especially advantageous for high-value vehicles, since it avoids depreciation caps, there are many considerations to weigh when making this decision.  

• Purchasing: Deduct depreciation, interest, and operating costs.

• Leasing: Deduct lease payments, but you’re locked into the mileage method chosen for the entire lease.

Compliance and Record-Keeping: The Foundation of an Audit-Proof Deduction

No deduction strategy matters if accurate records do not support them.

IRS requires a contemporaneous mileage log

The IRS requires a contemporaneous log, including:

• Date

• Trip purpose

• Start and end odometer readings

• Destination and total miles driven

Reconstructing mileage and other records after the fact is a red flag that may inspire the IRS to take a closer look at your operations.

Calculating and proving business-use percentage

Your deductible portion is calculated as:

Business Miles ÷ Total Miles = Business-Use %

This percentage governs the deductible portion of all actual expenses, from fuel to depreciation. If business use is under 50%, accelerated depreciation methods like Section 179 are off the table.

Documenting actual expenses

When documenting actual expenses, keep receipts for:

• Gas and repairs

• Insurance

• Loan and lease documents

• Registration fees

1-800Accountant’s full-service bookkeeping solution can handle expense tracking, categorize transactions, and store digital receipts—saving hours of manual work while ensuring accuracy.

Avoiding Common Pitfalls and Ensuring Long-Term Success

The commuting rule trap

Travel from home to your primary office is not deductible because it isn't considered business travel. Only business-related trips count.

The risk of depreciation recapture

If your vehicle’s business use falls below 50% after claiming accelerated depreciation, the IRS may “recapture” excess deductions—leading to a surprise tax bill.

This is a key area where ongoing tax advisory provides value by monitoring compliance and preventing costly surprises. 

Claiming 100% Business Use

Unless the vehicle is strictly for business (e.g., a delivery van), claiming 100% use is a major audit trigger. Avoid potential unwanted attention by claiming the proper business and personal use amount for your mixed-use vehicle. 

Partnering with 1-800Accountant to Maximize Your Vehicle Deduction

Navigating IRS rules, depreciation strategies, and compliance is complex. With 1-800Accountant’s business tax advisory, small businesses gain access to CPAs, EAs, and tax professionals who model deduction strategies year-round, while adjusting to ever-changing realities of the market. 

From choosing the right vehicle to ensuring documentation is virtually audit-proof, our team integrates vehicle write-offs into your broader financial plan. The result: 

• Lower taxable income

• Improved cash flow

• Peace of mind

Schedule a free 30-minute consultation today to see how much you can save in federal tax with your business vehicle.

Vehicle Purchase Deduction FAQs

Can I deduct the cost of a used vehicle?

Yes, as long as it’s used more than 50% for business and placed in service during the tax year, used vehicles qualify for Section 179 and bonus depreciation. If you outsource tax preparation, make sure this is reflected on your income tax return.

What happens if I sell the vehicle I wrote off?

You may owe taxes on the “recapture” of depreciation if the sale price exceeds the vehicle’s adjusted tax basis.

What if I switch from LLC to S corp—does that affect my vehicle deduction?

You can continue deducting vehicle expenses, but you must report these shifts to the corporation. It’s best to consult a CPA for entity-specific transition rules.

Can I still claim the deduction if I finance the car?

Yes. Both principal (via depreciation) and loan interest are deductible under the actual expense method.

Can I write off an electric vehicle through my LLC?

Yes, but note that federal EV tax credits expire after September 30, 2025, under the OBBB Act. Businesses should act quickly if planning to purchase EVs.

What happens if my business use drops below 50% after year one?

Accelerated deductions like Section 179 and bonus depreciation may be recaptured if your business use drops below the 50% threshold, requiring you to pay back some of the tax benefit.

Can I deduct multiple vehicles through my LLC?

Yes, as long as each vehicle meets business-use requirements and tax deductions are properly documented, you can deduct multiple vehicles through your LLC for business purposes. 

What forms do I use for reporting vehicle-related tax write-offs?

Report vehicle-related tax write-offs using IRS Form 4562 (Depreciation and Amortization) for Section 179 and depreciation, while operating costs are reported on Schedule C or the relevant business tax form.

How should I manage employees/contractors who use their cars as part of my business?

You can reimburse them at the IRS standard mileage rate or establish an accountable plan to cover actual expenses. Keep detailed records of reimbursements.