Auto Depreciation Limits

Post Date: 4/24/18
Last Updated: 4/24/18


Cross References
- Rev. Proc. 2018-25
- IRC §280F

When the actual expense method is used for deducting the business use of a vehicle, the cost of the vehicle is depreciated under MACRS using a 5-year recovery period. The Section 179 deduction is also allowed for business vehicles. The annual deduction for depreciation, including any Section 179 deduction or special depreciation allowance, is limited to statutory amounts. The limits are adjusted each year for inflation.

The annual deduction is the lesser of:
- The vehicle's basis multiplied by the business use percentage multiplied by the applicable depreciation percentage, or
- The section 280F limit multiplied by the business percentage.

The Tax Cuts and Jobs Act increases the IRC section 280F limitations for vehicles placed in service after 2017. The new law also removes the separate section 280F limitations for trucks and vans. The chart below reflects the new section 280F limits for 2018 in comparison to previous years.

See printable version for remainder of article.
Return to Tax Industry News
© Tax Materials, Inc. 2021