Tax Preferences for Sport Utility Vehicles (SUVs)

The surge in domestic popularity of large sport utility vehicles (SUVs) since the early 1990s has stirred a debate over what steps the federal government should take if any to mitigate their effects on the environment highway safety traffic congestion and U.S. dependence on foreign sources of oil. Legislative activity in the 108th Congress expanded the scope of the debate to include the ways in which the federal tax code encourages the purchase of heavy-duty SUVs primarily for business use. In May 2003 Congress passed a measure (the Jobs and Growth Tax Relief Reconciliation Act of 2003) that raised the maximum expensing allowance under section 179 of the Internal Revenue Code (IRC) for these vehicles to $100000 from May 2003 through the end of 2005; the American Jobs Creation Act of 2004 lowered the allowance to $25000 as of October 22 2004.