Some business owners may wonder whether commercial vehicle wraps are tax deductible. Any investment in advertising and marketing can be 100 percent tax-deductible compared to equipment purchases and other business expenses. However, before you file any deductible expenses, it’s best to consult your tax advisor before taking action.
Tax experts can recommend validating if car signage tax deductions can be applied to your business.
Below we’ll explore some details about vehicle wraps and graphics tax deductibles that will help you make an informed decision.
- Essential details about vehicle wrap tax deduction
- Is vehicle wrap an asset or expense?
- What part of vehicle wrap expenses is tax deductible?
- Pitfalls to avoid
- Use cost-effective and tax deductible fleet wraps to advertise your business
Essential Details About Vehicle Wrap Tax Deduction
Some business owners who have invested in vehicle wraps may wonder if they could file for advertising and promotion tax deductions. The short answer is yes; the cost of installing fleet wrap is considered a marketing and advertising investment, which is tax-deductible.
If you hire an experienced fleet wrap installer like AZPRO, you’ll be paying for the graphic design and installation of fleet graphics. In addition, the vinyl will contain branding images, marketing messages, and your business logo. Your contact information will also be displayed on the exterior of your commercial vehicles.
These symbols and messages are forms of advertisements, which the Internal Revenue Service (IRS) considers fully tax-deductible. However, merely installing them won’t always qualify as tax-deductible. There are specific applications the IRS deems as “ordinary and reasonable” under IRS Publication 535 Business Expenses.
Here are a few rules you need to keep in mind:
- All business advertising is tax-deductible, including vehicle wraps, company license plates, stickers, decals, and placards.
- Any company vehicle with advertising graphics that the public can view can be qualified as a form of advertising.
- Placing advertisements or any kind of display material on a vehicle doesn’t automatically change its use as an advertisement. This rule implies that if you drove it as a personal vehicle, you can’t charge the mileage as a deductible expense for your business.
- You can only conduct the use of your vehicle as a business expense when you drive it and use it for business operations and similar purposes.
- Advertisements, such as fleet graphics installed in company vehicles, count as a car signage tax deduction.
- Only business miles can be filed as advertising and promotion tax deductions. Always track the business miles used as advertising. However, it won’t count as a deductible when employees use company vehicles to commute from home to work and vice versa.
So, are wrap fees tax deductible? In most cases, the answer is yes. Make sure to keep your receipts after you have installed fleet graphics or if you have any maintenance work. They can be used as tax-deductible expenses.
However, using your car and the mileage should be qualified, so it’s crucial for you to first consult with your tax advisor. Vehicle graphics are a cost-effective form of advertising, and the costs can be tax-deductible. But you’ll need to prove that certain uses of your fleet-wrapped vehicles are for advertising purposes.
Is Vehicle Wrap an Asset or Expense?
Vehicle wraps are an asset with tax deductions as long as they are “ordinary and reasonable.” What this means is that the company must use the wraps for advertising their brand. Vehicle wrap tax laws can help with all kinds of regular advertising expenses, including business mileage and the initial costs of the advertising graphics. Whether you’re a multi-corporational or a small business owner, keeping your receipts and consulting with your tax advisor can make a huge difference in overall expenses.
What Part of Vehicle Wrap Expenses is Tax Deductible?
The IRS deems the majority of advertising expenses as reasonable miscellaneous tax deductibles. This category includes all types of vinyl wraps installed on your company vehicles.
Regardless of size, all types of decals can be considered tax-deductible. This definition includes partial vehicle wraps as well. If partial wraps are installed on your company’s vehicles, you can have them qualified as an advertising expense.
All the costs associated with creating fleet wraps can also be tax-deductible. This cost includes designing the graphics, production, installation, and maintenance. Since these costs are necessary for your organization’s operations, according to IRS rules, these expenses will fall under miscellaneous business tax deductibles.
In addition to the cost to install and maintain fleet graphics, you can also deduct the fuel costs, vehicle payments, mileage, lease payments, and vehicle maintenance costs from your deductibles. This policy works well for smaller businesses that rent vehicles to promote their business or use them for employee transportation. As long as these vehicles are used in your operations and have fleet wrap advertising your business, you may include specific maintenance and operational costs on your tax returns.
Short-term wraps (those used for a limited time) can also be qualified as tax-deductible. For example, if you’re running a quarterly promotion and have installed fleet graphics in your vehicle. Whenever that vehicle is used to transport goods or advertise your business, it can qualify as an advertising expense. While employed as an advertisement, the cost of wrap installation, gas, mileage, and maintenance of that vehicle can be added to your deductibles.
Pitfalls to Avoid
There are certain pitfalls when business owners try to qualify certain investments and expenses as a vehicle wrap tax deduction. For example, some would try to deduct everyday wear and tear as a deductible expense, but that won’t apply. However, regular and scheduled fleet wrap maintenance can be considered a deductible.
You also won’t be able to use the mileage and gas expenses when using your vehicles for personal purposes like taking your kids to school or using your company vehicle for weekend trips. If you aren’t sure which part of your expenses can be considered a deductible on your tax returns, it would be wise to keep all your receipts. Then, present them to your accountant or tax attorney to check if they qualify under specific tax codes implemented in your area.
Use Cost-Effective and Tax Deductible Fleet Wraps to Advertise Your Business
At AZPRO, we install eye-catching, high-quality vehicle wraps that effectively advertise your business. We also equip you with valuable kits and tools to care for your fleet wrap to prolong the usable life of your investments. Our products also carry a 3M Matched Components Systems (MCS) warranty. Our team provides receipts and documentation, which you can use for filing tax returns. Are you ready to get your mobile billboard on the road? Call our specialists at 866-503-8345 or fill out this contact form for more information, professional tips, and advice.
Published On: July 7, 2022
Updated On: July 26,2023