If you have been thinking about purchasing an SUV for business to take advantage of the large tax break currently available, you better hurry. One
of the provisions of the energy legislation currently under consideration by Congress would bring this big break to a screeching halt, by applying the
same luxury auto rules to SUVs that apply to other passenger vehicles.

The Senate and House currently are considering energy legislation that contains a tax provision dealing with SUVs. If the SUV provision in the
House version of this legislation becomes part of the final legislation, taxpayers who buy heavy sport utility vehicles (SUVs) after 2007 and
use them for business will lose the generous Section 179 expensing and depreciation deductions that are available under current law.

Currently, heavy SUVs (those with a gross vehicle weight rating of more
than 6,000 pounds) are exempt from the luxury auto deduction limits,
because they fall outside of the definition of a passenger auto and thus
were allowed to use the full Section 179 deduction without restriction. This provided taxpayers, in some cases, the ability to write-off the entire cost of the business portion of the SUV in the year purchased. In an earlier effort to curtail the tax breaks for SUVs, Congress had limited the Section 179 deduction for SUVs (rated at 14,000 pounds GVW or less) to $25,000, beginning with purchases after October 22, 2004. However, this still
provided a substantial deduction - one way in excess of that allowed for a regular passenger vehicle. The current maximum first-year deduction for passenger vehicles is $3,060.

Congress has previously been reluctant to further curtail the SUV write-off
for fear of harming the ailing U.S. auto industry.