The tax-smart way to replace a business vehicle

10_31_16-ThinkstockPhotos-515365876_SBTB_560x292.jpgAlthough a vehicle’s value typically drops fairly rapidly, the tax rules limit the amount of annual depreciation that can be claimed on most cars and light trucks. Thus, when it’s time to replace a vehicle used in business, it’s not unusual for its tax basis to be higher than its value. This can be costly tax-wise, depending on how you dispose of the vehicle: