When deciding whether to purchase a vehicle under your personal name or your S corporation’s name, there are important tax implications to consider. This guide provides an overview to help you understand the potential benefits, and situational factors for each option.

Please note that when considering “business” vs. “personal” use, commuting between your home and your regular workplace are generally considered personal miles (i.e., commuting).

However, if your regular workplace is your home office (e.g., telemedicine), then it’s possible that mileage from your home office to visit clients and/or medical facilities could be considered business miles. In addition, miles travelled between multiple hospitals or client sites during the day could be considered business miles.

Please also note that you are only entitled to a vehicle deduction if you have a business or are self-employed. Unfortunately if you are simply a W-2 employee, you are not entitled to a vehicle deduction.

When It May Make Sense To Buy Under S Corporation

  • Business use exceeds 50% (allowing for bonus depreciation and Section 179)
  • Heavy vehicles (over 6,000 lbs gross vehicle weight rating, which covers most large SUVs and trucks): for 2026 these can take up to $32,000 of Section 179 expensing, and 100% bonus depreciation can apply to the remaining business-use portion, so most of the cost can be deducted in year one.
  • Maximum first-year deductions needed

Advantages

  • Maximum depreciation (bonus depreciation or Section 179)
  • 100% of business expenses deductible (with personal use portion considered a taxable fringe benefit)

Disadvantages

  • Personal use of a business vehicle is a taxable fringe benefit and must be reported as income on the shareholder-employee’s W-2, adding compliance complexity.
  • When the vehicle is sold or traded in, the depreciation you took can be recaptured, meaning part of the sale price is taxed as ordinary income. The bigger the first-year write-off, the bigger this potential add-back later.

When It May Make Sense To Buy Under Personal Name

  • Business use under 50% - W-2 income from personal use erodes S corp benefits
  • Multiple vehicles - Easier to track separately with reimbursements
  • Variable business use - Flexibility without W-2 adjustments

Advantages

  • With an accountable plan, S Corporation can reimburse you for mileage or actual business portion of expenses

Disadvantages

  • Cannot claim depreciation (depreciation is included in the standard mileage rate)
  • Limited to business percentage of expenses (or standard mileage)