December to Remember: Smart Tax Savings on Business Vehicle Purchases

As we head into the final month of the year, many business owners start thinking about last-minute tax strategies. One of the most common questions we hear during December tax planning sessions is, “Should I buy a vehicle before year-end to save on taxes?”

A new car or truck purchase can create tax deductions, but it’s not always the best move.

At Kamish & Associates, we want our clients to understand the full picture before making a big financial decision. Here’s what you need to know before turning December into your own “tax savings month” with a vehicle purchase.

Buying a Vehicle Only for a Tax Write-Off Isn’t Always a Good Strategy

A new vehicle might offer bonus depreciation or Section 179 benefits, but buying one solely to reduce your tax bill can backfire. Here’s why:

1. You’re still spending real money to “save money.”

A tax deduction never equals a dollar-for-dollar savings.If you spend $60,000 on a vehicle and get $20,000 tax savings, you still spent $40,000 out of pocket. If you don’t need the vehicle for the business, that’s not smart planning.

2. Cash flow comes first.

A vehicle payment can stretch cash that should be reserved for payroll, growth, or emergencies. Tax planning should never put a strain on your business’s ability to operate smoothly.

3. It must qualify as a business vehicle.

To take the deduction confidently:

• The vehicle must be titled in the business name, not your personal name.

• You need commercial auto insurance.

• You must track business mileage and business use percentage.

If those requirements aren’t met, the deduction may be reduced, delayed, or denied.

Not a Fleet Business? Use Extra Caution.

Non-fleet businesses often don’t use vehicles heavily enough to justify a purchase.If your business doesn’t rely on transportation daily, a new vehicle is rarely the first place to look for tax savings.

For most of our small business clients, the deduction simply doesn’t outweigh the long-term costs of owning a vehicle they don’t actually need.

When We Bring Up Vehicle Purchases in Tax Planning

During year-end planning with our business clients, vehicle purchases are always the last tax strategy we discuss, and only if it makes sense.The funny part? Most of the time, our clients ask about vehicles before we ever get to that point.

The reason we save it for last is simple:There are stronger, more predictable, and more cost-efficient tax strategies to look at first.

What Tax Advisors Typically Recommend Before Considering a Vehicle Purchase

Here’s the general order of tax planning items a business advisor will walk through before even mentioning vehicles:

1. Retirement Contributions

This is almost always the most powerful deduction. Options include:

• SEP IRA

• Solo 401(k)

• SIMPLE IRA

• Traditional employer plans

Retirement contributions lower taxes while building long-term wealth.

2. Equipment, Furniture, and Technology

Necessary business assets often qualify for Section 179 or bonus depreciation.These purchases usually provide greater long-term benefit than a vehicle.

3. Software, Tools, and Business Improvements

Updates to systems, processes, and workspace needs are fully deductible and tend to support productivity and growth.

4. Prepaying Certain Business Expenses

Some expenses can be paid in advance to capture the deduction this year.This might include insurance, leases, subcontractors, or service contracts.

5. Employee Bonuses or Owner Payroll Adjustments

If you’re an S-Corp owner, adjusting payroll or issuing bonuses can help optimize tax outcomes and strengthen your team.

6. And finally… vehicles

Only after everything above is reviewed do we look at whether a business vehicle purchase is appropriate.

Bottom Line

A vehicle can be a great tax deduction - if it’s something the business truly needs. At Kamish & Associates, we help clients avoid year-end surprises by focusing on strategies that support cash flow, long-term financial health, and smart tax savings.

If a vehicle makes sense for your business, we’ll let you know. If it doesn’t, we’ll help you find better ways to reduce your tax burden without unnecessary spending.

If you’d like to schedule a tax planning session before year-end, we’re here to help you make December a month to remember.