Smart strategies for maximizing business vehicle tax benefits

Knowing the rules around business-use vehicles is key to giving clients solid, reliable advice. A good understanding of how things like reimbursements, depreciation and ownership choices work helps avoid surprises at tax time and makes it easier to guide clients toward smart, money-saving decisions.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their corresponding answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: What if they only use the vehicle to commute to their single business location?

A: If an S corporation shareholder or employee is using a vehicle solely for commuting to a single, regular business location, that commuting use is considered personal use, not business use.

Q: What is a control employee?

A: In general, for nongovernment employers in 2025, they include board or shareholder-appointed, confirmed, or elected officers whose pay is $140,000 or more, directors, employees whose pay is $285,000 or more and employees who own a 1% or more equity, capital or profits interest in your business. For a government employee, they are either an elected official or government employee whose compensation is equal to or exceeds Federal Government Executive Level V. See Publication 15-B, Employer’s Tax Guide to Fringe Benefits, for additional information.

Q: Are control employees (corporate officer, director, shareholder, etc.) allowed to use the IRS commuting valuation rule?

A: Control employees are not allowed to use the IRS commuting valuation rule.

Q: If a vehicle is in the employee’s name and not the S corporation’s, will it be treated as a company vehicle?

A: If a vehicle is titled in the employee’s name and not in the S corporation’s name, it is not treated as a company vehicle for tax purposes. The IRS considers legal title and ownership critical. If the employee owns the vehicle, it is a personal vehicle, even if used for business.