Section 179 Tax Deduction for the Volvo XC90 in 2026

Volvo Section 179 Tax Savings - Volvo Cars Cincinnati

IRS Section 179 and 168(k) Potential Tax Advantages

Business owners have the opportunity to make purchasing a new Volvo XC90 even more rewarding thanks to the benefits made possible by Sections 179 and 168(k) of the IRS tax code. In fact, choosing a new Volvo XC90 SUV instead of some other luxury sedan can be a smart decision that provides plenty of advantages not only for you, but for your business as well. But there have been important changes to these tax deductions for the 2026 Tax Year, and we've summarized the most relevant ones below.

2024 Volvo XC90

IRS Section 179 for 2026

Section 179 of the IRS tax code allows businesses to deduct the price of qualifying equipment, such as vehicles, purchased or financed during the tax year. The Internal Revenue Service breaks down the list of vehicles that qualify for Section 179 deduction into three primary groups: Light, Heavy, and Other.

The Volvo XC90 falls into the "Heavy" category - which is defined as vehicles with a GVWR (gross vehicle weight rating) over 6,000 pounds, but not more than 14,000 pounds. For 2026, Section 179 allows for a maximum depreciation of $30,500 for "Heavy" vehicles in the current tax year, provided the vehicle is bought and put into service before January 1, 2027 and also meets certain other conditions:

  • The vehicle can be either new or used; however, it must be purchased in an "arm's-length" transaction that has been financed with qualified loans and leases and the title of the vehicle must be in the company's name and not in the name of the company owner.
  • At least 50% of the time, the vehicle should be used for business purposes and if the vehicle is not used completely for business purposes, 100% of the time, then there is a reduction of depreciation limits by the corresponding percentage of personal usage.
  • You can claim the Section 179 deduction only in the tax year in which the vehicle has been put into service i.e. when the vehicle is ready and available, although you are not using the vehicle.
  • Also, a vehicle that has been used for personal purposes first does not qualify for the Section 179 deduction if its purpose is changed to business use in a later year.
  • Note: Individual tax situations may vary. Please consult your tax advisor for complete details on rules applicable to your business.

IRS Section 168(k) "Bonus Depreciation"

Additionally, Section 168(k) allows for additional "Bonus Depreciation" amounting to 60% of the purchase price of the vehicle through the end of 2026, which when added to the $30,500 from Section 179, can allow a business that purchases a new Volvo XC90 to depreciate the entire purchase price in the 2026 tax tear, instead of depreciating it over 5 years. This can deliver a significant tax savings to your business in the 2026 tax year while also allowing you to upgrade your business vehicles.

Example

"Heavy" Section 179

"Light" Section 179

2026 IRS Section 179 Maximum 1st Year Depreciation$32,000$12,300
Section 168(k) Bonus Depreciation100% of Purchase PriceCapped at $8,000 for Luxury Vehicles
Qualifying VehiclesNew & UsedNew & Used

Example Vehicle

Volvo XC90 SUV

Some Other Luxury Sedan

Purchase Price$67,500$67,500
First Year Section 179 Maximum Depreciation$32,000$12,300
Maximum First Year Section 168(k) Bonus Depreciation$35,500Capped at $8,000
Total 1st Year Depreciation$67,500$20,300
Additional 1st Year Depreciation for "Heavy" Section 179 Vehicles
$47,200-

Individual tax situations may vary. The information presented was accurate at time of publishing. Federal rules and tax guidelines are subject to change. Consult your tax advisor for complete details on rules applicable to your business.

**With Gross Vehicle Weight Ratings (GVWR) of more than 6,000 pounds, the Volvo XC90 is classified as a "Heavy SUV". Gross Vehicle Weight Rating (GVWR) is the manufacturer's rating of the vehicle's maximum weight when fully loaded with people and cargo.

**REMINDER: If you have any questions, be sure to contact your tax professional for exact recommendations and rules related to Section 179 and vehicle eligibility.**

*Comparisons based on Section 179 and 168(k) of the Internal Revenue Code, which allows for additional first year depreciation for eligible "Heavy" vehicles and reflects figures for owners who purchase vehicles for 100 percent business use and place vehicles in service by January 1, 2027.