The Car and Truck Fleet and Leasing Management Magazine

SUV Tax Loophole Survives Energy Bill

November 24, 2003

According to a Reuters report, Republican leaders on November 17 killed a Senate plan to close a loophole allowing small-business owners to deduct up to $100,000 from their taxable income for buying a luxury sport utility vehicle. Language eliminating the SUV loophole was inserted into the Senate's version of a broad energy bill, which also has $23.4 billion in tax breaks for oil, natural gas, coal and other energy sources. But the provision was dropped after House negotiators rejected the Senate's change. Republican leaders swiftly moved to ensure no mention of the loophole was included in the final version of the energy bill, which went to the full House and Senate for votes later in the week. Republican Sen. Don Nickles of Oklahoma offered the proposal to drop the tax break for doctors, lawyers, real estate agents and other business owners who buy expensive SUVs. "There is enormous abuse of this provision. People are driving SUVs through this loophole," Nickles said. The deduction of up to $100,000 from taxable income dramatically cut the price of a Hummer H2, Land Rover and other expensive, gas-guzzling SUVs for small business owners in the highest tax bracket. The loophole was part of the $350 billion Bush tax cut enacted in May and applied to the purchase of a vehicle for business use weighing 6,000 pounds (2,722 kg) or more.
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