Trucks used in a trucking business are classified as 5-year MACRS property by the IRS. That means under the standard depreciation method, you spread the cost of each truck over a five-year recovery period using a set percentage schedule. The percentages are 20% in year one, 32% in year two, 19.2% in year three, then 11.52% in years four and five, with 5.76% in year six. The extra year happens because MACRS assumes a half-year convention, meaning the IRS treats the truck as if you placed it in service at the midpoint of the first year.

Section 179 changes this entirely for qualifying small operators. Instead of spreading the deduction over five years, you can elect to expense the full purchase price of a truck in the year you put it into service. The annual Section 179 limit is over $1.2 million, which is more than enough to cover most truck purchases. The catch is that your Section 179 deduction cannot exceed your taxable business income for the year. If you buy a $180,000 truck but your business only shows $90,000 of net income, you can only deduct $90,000 under Section 179 that year. The remaining amount carries forward.

Bonus depreciation is the third option. Under the Tax Cuts and Jobs Act, bonus depreciation allowed 100% first-year expensing through 2022, but it has been phasing down since then. For 2025, the bonus depreciation rate is 40%, and it drops to 20% in 2026 before going away entirely in 2027 unless Congress extends it. Bonus depreciation does not have the business income limitation that Section 179 has, so it can actually create or increase a net operating loss. This makes it useful in situations where Section 179 gets capped by income.

Many freight and logistics operators combine these methods. You might use Section 179 up to your income limit and then apply bonus depreciation to cover part of the remaining cost. Whatever is left after both gets depreciated under regular MACRS over the remaining years. The ordering matters for tax planning, so work through the numbers with your accountant before filing.

One important detail for trucking companies is that heavy vehicles over 6,000 pounds gross vehicle weight are not subject to the luxury automobile depreciation caps that apply to lighter vehicles. Semi-trucks, box trucks, and most commercial vehicles used in trucking operations clear this threshold easily, which means there is no artificial ceiling on your annual depreciation deduction beyond the Section 179 rules.

From a bookkeeping standpoint, every truck needs to be tracked as a fixed asset on your balance sheet. You record the purchase price, the date placed in service, and the depreciation method elected. Each month or year, depreciation expense hits your income statement while the accumulated depreciation reduces the asset’s book value on the balance sheet. When you eventually sell or trade in a truck, the difference between the sale price and the remaining book value creates a gain or loss that gets reported on your taxes.

Getting this wrong has real consequences. Taking too much depreciation means you owe taxes and penalties when the IRS catches it. Taking too little means you overpay taxes for years. If your books are not tracking fixed assets properly, neither you nor your accountant has the information needed to make the right election at tax time. For owners handling small business bookkeeping in the Bronx and surrounding areas, keeping a clean fixed asset schedule throughout the year makes tax season straightforward instead of a scramble to reconstruct what was purchased and when.