This is how you can fully depreciate your Acura MDX Type S in your first year of ownership using section 168 (k)
*Disclaimer: I’m not a tax expert and any advice I give you here might be inaccurate. Please consult with your local tax professional on how to proceed.
Earlier last year I blogged about how since the GVWR of the 2022 Aston Martin DBX is over 6,000 pounds, if new DBX owners qualify, they can fully depreciate their DBXs in the first year of ownership. Those same potential tax deductions are now officially true for the new Acura MDX Type S.
According to Treg Motor Works, the 2022 Acura MDX Type S has a GVWR of 6,085 lbs which means it is, according to the IRS, a heavy vehicle not subject to depreciation (including bonus depreciation) limits as it pertains to Section 179 and 168(k) of the US Tax code. Non-Type S MDXs, however, have GVWRs below 6,000 pounds and are subject to limitations
Since the Acura MDX Type S and Type S with Advance Package have official MSRPs of $67,745 and $73,095 respectively, there are huge potential tax deductions if you plan to use your MDX Type S for business purposes.
Applying section 179 and 168(k) bonus depreciation assumes you’re using the MDX Type S for at least 50 percent for business purposes, any less, and you can’t apply these tax deductions.
Let’s assume, based on how you use your vehicle, you’ll probably qualify for Section 179 and bonus depreciation come tax season if you finance an Acura MDX Type S.
Knowing how hot the market, it’s also safe to assume these new MDX Type Ss will have at least a $5,000 dealer added markup tacked on.
If you finance a regular MDX Type S, with the ADM, for $72,745 ($67,745+$5,000 ADM) and decide to fully depreciate that Type S with that bonus first year depreciation (168 k) assuming you’re in the 35 percent tax bracket, that’s a potential $25,460 tax deduction.
Your MDX Type S effectively cost $47,285.
You can also elect not to use bonus first year depreciation, in which case, if you decide to use Section 179, you can still claim up to $25,000 (adjusted for inflation to $26,900 for 2021) of the vehicle purchase price for first year depreciation.
It’s important to note the amount of allowable bonus depreciation will be phased out over four years by 20 percent starting in 2023.
Depending on your tax situation, knowing the MDX Type S is classified as a heavy vehicle for section 179 and bonus depreciation 168(k) can be useful when you’re shopping around.
The MDX Type S might have a hefty ADM tacked on but, if you qualify, tax deductions might cancel that out and then some.
As mentioned, it’s important to consult with a tax professional if you have questions about tax implications around properly depreciating an Acura MDX Type S if you’re planning to finance one for business purposes.