If you bought a motorcycle or even used one during the year, you may be able to write it off. Here are some situations that do and don’t qualify for deducting your motorcycle.
Table of Contents
- Personal Motorcycle Purchase Write Offs
- Using Your Motorcycle for Work as an Employee
- Motorcycle Business Write Offs
- Write Offs for Motorcycle Racing or Sposored Riders
- Claiming Your Motorcycle Write Offs
Personal Motorcycle Purchase Write Offs
If you buy a motorcycle for your personal use, there are several deductions you might qualify for.
Motorcycle Sales Tax Deduction
If your state charges sales tax on motorcycle purchases, you may be able to claim it as an itemized deduction. You can claim all the sales tax you pay during the year as an itemized deduction if:
- You don’t use the standard deduction. You’ll want to do the math to see if your itemized deductions add up to more than the standard deduction. If you don’t have any other itemized deductions, the sales tax on a motorcycle might not be more than the standard deduction.
- You choose to claim sales tax instead of state income tax. You can either deduct sales taxes or state income taxes based on which one gives you the bigger deduction. The IRS doesn’t let you take both in the same year.
- Your sales tax plus property tax is a maximum of $10,000. Deducting sales tax and property tax is known as the State And Local Tax (SALT) deduction. The limit is $10,000 in both taxes combined. If you’re over $10,000, you can deduct $10,000.
Motorcycle Property Tax Deduction
If your state charges property tax on motorcycles, you can also deduct the property tax on your itemized deductions under state and local taxes. To be eligible for the write off, the tax has to be an annual tax based on the value of your motorcycle.
Registration fees or one-time taxes (except sales tax as above) don’t qualify. Property tax on your motorcycle, home, and other vehicles all goes under the same $10,000 SALT deduction limit.
Electric Motorcyle Credit
I haven’t seen anything for 2022 and beyond, but check that link in case Congress extends the credit or creates a new one. If you live in a state with income taxes, check your state for incentives as well.
Manufacturers like Damon frequently post updates about current tax benefits. Of course, manufacturers and dealerships aren’t tax experts and want to sell you something, so always verify what they’re telling you about taxes.
Electric Motorcyle Charging Station Credit
Another tax credit that expired at the end of 2021 was the Alternative Fuel Infrastructure Tax Credit. This gave you a credit for up to 30% of the cost of installing an electric vehicle charging station in your home.
Again, check back to see if this gets extended or replaced in 2022 or beyond.
Using Your Motorcycle for Work as an Employee
If you use your motorcycle for work trips or other reasons as an employee, you can’t claim those expenses on your taxes. You’re limited to the usual personal deductions.
If your employer reimburses you for expenses, you don’t need to include those reimbursements in your taxable income if your employer follows the IRS expense reimbursement rules.
Motorcycle Business Write Offs
If you use a motorcycle in your business, you can take deductions for both using it and buying it. The size of your business doesn’t matter. It can include things like courier deliveries or working for DoorDash.
Motorcyle Standard Mileage Rate
Motorcycles don’t qualify for the standard mileage rate. Only cars, trucks, and vans qualify. The reason is that motorcycles cost much less to operate.
People have asked the IRS to create a motorcycle standard mileage deduction in the past, but it hasn’t happened yet.
Motorcyle Actual Expenses Method
When you use a motorcycle for business trips, you can deduct your actual expenses. Expenses can include:
If you use your motorcycle for both business and personal reasons, you will need to track all of your mileage during the year. You can only deduct the business portion of your expenses. So if you ride 6,000 miles for business and 4,000 miles for personal reasons (10,000 total), you can deduct 60% of your expenses.
Motorcycle Purchase / Depreciation
If you buy a motorcycle to use in your business, you deduct the purchase cost as depreciation. The purchase cost can include sales tax as long as you’re not deducting the sales tax as a personal itemized deduction.
There are two ways to deduction a motorcyle purchase.
- Section 179 allows you to deduct the purchase price of a motorcycle in full if you meet certain limits (almost all small businesses will) and you use the motorcycle in business at least 51% of the time.
- Regular depreciation allows you to deduct the cost of the motorcycle over a five-year period.
You may be able to take a depreciation deduction if you previously purchased a motorcycle for personal reasons and began using it in your business. If you have a motorcycle you used in your business and change to only using it for personal reasons, you may need to adjust your depreciation deductions. See IRS Publication 946 for details or consult a tax professional.
Write Offs for Motorcycle Racing or Sposored Riders
If you race your motorcycle or have sponsors for another reason, you need to figure out if you’re a business or a hobby. Generally, you’re a business if you’re actually in it to make money and are making a profit or at least have a solid business plan to do so. If your sponsors are only offsetting your expenses with no real way to make a profit, you’re a hobby.
If you’re a business, you can take the business deductions above. You’ll also need to include your prizes and sponsorship payments on your Schedule C tax form for your business profit or loss.
If you’re a hobby, you can only take the personal deductions. You must report any sponsor payments or prizes as other income on your Form 1040. You can’t offset that income with any other expenses.
Read this post for more info on when you want to be a business versus a hobby and how to get there the right way.
Claiming Your Motorcycle Write Offs
The motorcycle write off rules sound a little complicated, but if you use tax filing software, it will walk you through everything you need. You’ll also want to check out these options for tracking your mileage and expenses so you can claim your deductions.