Step 1: Will the vehicle be used >50% for business?
If business use is 50% or less, you cannot use Section 179 or accelerated bonus depreciation — straight-line depreciation only. Many home-based service providers fall below 50%. The standard mileage method works fine in low-business-use cases (multiplied by business-use percentage).
Step 2: Is GVWR > 6,000 lbs?
A heavy vehicle (over 6,000 lbs GVWR) escapes the luxury-auto depreciation cap. Section 179 and bonus depreciation can produce massive first-year deductions on heavy SUVs, pickups, and vans. Light vehicles face annual depreciation caps that severely limit the deduction.
Step 3: Buy or lease?
Buying lets you depreciate (or expense). Leasing lets you deduct lease payments. For light vehicles, the lease "inclusion amount" (an annual income add-back for luxury leases) approximates the depreciation cap. For heavy vehicles, buying generally beats leasing because Section 179 / bonus is so generous.
Step 4: Standard mileage or actual?
Standard usually wins for high-mileage, low-cost vehicles. Actual usually wins for high-cost or heavy vehicles. You must choose standard in the first year if you ever want to use it for that vehicle. Run both methods at year 1 to make an informed choice.
Step 5: Title in your name or in the LLC/S-corp?
A sole proprietor or single-member LLC owner can title the vehicle personally and deduct the business-use portion. An S-corp owner can either (a) own the vehicle personally and have the corp reimburse business mileage under an accountable plan, or (b) have the corp own the vehicle and report the personal-use portion as wages. The reimbursement approach is usually simpler.
Common mistakes worth avoiding
The recurring mistakes filers make on this topic cluster in three patterns: (1) optimizing for current-year tax at the expense of multi-year tax, (2) treating the choice as binary when the IRS framework actually allows nuance (partial elections, hybrid methods, year-by-year reassessments), and (3) deferring the analysis until the return is due rather than running it during the year when the result can still influence behavior. A short annual review — even thirty minutes — catches all three failure modes and replaces vague intuition with documented reasoning.
When to bring in a professional
DIY tax software handles most small-business returns competently, but a handful of situations reliably justify a CPA or enrolled agent: an entity formation or election, a multi-state filing situation, a significant fixed-asset purchase that triggers Section 179 or bonus depreciation modeling, a retirement-plan setup, an IRS notice or examination, and the year of an entity sale. Outside those situations, software plus an annual half-day of personal review produces a defensible return. The cheapest professional engagement is a one-hour consultation rather than a full-service tax-prep relationship.