TikTok Influencers Are Encouraging You to Use ‘Tax Hacks’ To Buy Huge SUVs and Trucks

Search the term "tax hack" on TikTok, and you'll likely find a video of a heavily bearded finance influencer bragging about buying a $70,000 truck that is statistically more likely to kill a pedestrian or cyclist — and then deducting it from his annual bill to the IRS, even if he never uses the vehicle to haul anything heavier than himself and a passenger.

And that hirsute social media star isn't alone. In the last few years, the internet has exploded with memey tributes to Section 179 of the US tax code, which, as of tax year 2023, allows U.S. business owners to deduct the costs of newly-purchased vehicles that weigh more than 6,000 pounds, provided they use that megacar for "business purposes" at least 51 percent of the time and don't exceed a deduction limit of $28,900.

Add on "bonus depreciation" for business owners — a similar but differently structured deduction that TikTokers frequently conflate with Section 179 — and at least this year, business owners can deduct up to 80 percent of the cost of their ultra-heavy SUVs, vans, and trucks, often decreasing their tax bills by tens of thousands of dollars in a single year rather than depreciating their vehicle more slowly over time.

That bonus is currently set to phase out completely by 2026, but Congress is considering a bill to restore it to 100 percent, as it was during the Trump administration.

Businesses can receive deductions on smaller vehicles, too, but the benefits are smaller and slower, capping out at $20,220 when Section 179 and bonus depreciation are combined together and giving businesses less flexibility over when to depreciate their vehicles to maximize their tax benefits.

Colloquially known today as "the Hummer Deduction," Section 179 was originally introduced in 1958 to subsidize the costs of things like tractors for farmers, cargo vans for contractors, and expensive non-automotive equipment that small businesses truly needed, but struggled to afford.

Over time, though, Americans who don't rely a monster truck to complete their work have capitalized on the controversial rule, and automakers have been incentivized to add weight to their vehicles to increase the percentage of their fleet that's eligible for a maximum deduction. Congress has made some changes to discourage Americans from buying massive cars they don't really need — for instance, putting stronger depreciation caps on luxury SUVs — but some financial experts say elected officials could take a stronger hand.

"I’ve been a tax professional for 33 years, and let me tell you, those rules influence what a taxpayer will buy and what automakers will sell," said Thomas O'Saben, director of tax content and government relations at the National Association of Tax Professionals. "Before we came down with that limitation on SUVs, we had real estate agents buying full-size SUVs every day. ... [I've seen automakers] come out with four-door trucks with beds that are just big enough to qualify as a truck [that's eligible for better deductions], and nobody carries anything in them. Truly, what Congress does will drive people’s buying habits, and what manufacturers make to attract buyers."

Of course, getting a big tax break on big car isn't always easy — and because TikTok is a terrible place to get tax advice, influencers tend to gloss over the details of these deductions or outright get them wrong, especially as tax laws evolve and viral videos fall out of date but remain in heavy circulation.

For instance, 30-second reels generally don't make time to mention things like "depreciation recapture," or the tax hit businesses sustain when they sell these rapidly-depreciated vehicles within five years, start using them for non-business travel, or for a host of other reasons. They also don't often mention that deductions are scaled to the amount you actually use a car for business purposes — a.k.a., if only 51 percent of your recorded miles took you to job sites, you don't get a tax break on the other 49 percent — while skimming over the fact that failure to meticulously log your mileage can expose you to charges of fraud in the event of an audit.

Perhaps the part of Section 179 that gets most downplayed on social media, though, is how the large vehicles it subsidizes impact other road users — and why business owners should think twice before buying them, especially if a smaller car would do the job.

In addition to guzzling gas or gobbling up scarce battery materials to move a heavier mass, ultra-high vehicle weights are frequently correlated with high hood heights, which countless studies have found are significantly more likely to kill walkers in the event of a crash, particularly if they are small children. A recent study found that pedestrian deaths would decrease 18 percent if vehicle heights were capped at the level of a modest crossover.

In a perfect world, consumers wouldn't have to be persuaded not to take advantage of a tax loophole that tempts them to buy a car that's more likely to kill a toddler — and TikTokers couldn't rack up clicks and clout urging them to do the opposite.

Of course, business-based vehicle deductions aren't available to every American, and it's not clear how many people are nudged towards light truck ownership by tax breaks alone. Until we unwind the host of bad incentives that are pushing 80 percent of new car buyers towards megacars, though, that phenomenon is probably here to stay — and that includes the tax code, the light truck loophole in federal emissions standards, steep tarriffs on smaller, foreign-made vehicles, and the "SUV arms race" itself.

As we do that work, the least we can do is recognize that TikToks about tax hacks aren't telling the whole story ... even if we get a chuckle from whatever this dude with a jumbo pickle is doing.

"Any information that you get from any source, you need to trust but verify," added O'Saben. "Anybody can post anything on the internet, from cats singing a song to tax advice. If you have a sneaking suspicion that it may sound too good to be true, it might be."