What is the nature of the federal tax credit provided for SUVs?
The federal tax law does not provide a tax “credit” for SUVs. The favorable tax treatment such vehicles receive compared to regular automobiles stems from a combination of various federal tax laws on depreciating property (including automobiles and trucks) used for business. Generally, to benefit from these depreciation rules, vehicles, including SUVs, must be used for business at least 50% of time. For depreciation purposes, SUVs used in business are treated more favorably than regular automobiles. The distinction stems from the fact that federal tax laws classify vehicles for depreciation purposes based on weight and allow businesses to depreciate heavier and more expensive vehicles more rapidly. The original rationale for the weight threshold was to recognize the heavier, more expensive vehicles often necessary for business without providing an incentive for those who need a passenger automobile for their business to buy an expensive luxury model and write it off with favorable depr
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