Auto Depreciation Limits

Post Date: 3/12/12
Last Updated: 3/12/12

Summary

Cross References
• Rev. Proc. 2012-23
• 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 five-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 chart below reflects the new section 280F limits for 2012 in comparison to p revious years.

Vehicle Depreciation Limitations (Section 280F)
Tax year first placed in service: 2012 2011 2010 2009
Auto depreciation limitations based on 100% business or investment use:
1st year if special depreciation is claimed $11,160 $11,060 $11,060 $10,960
1st year depreciation $3,160 $3,060 $3,060 $2,960
2nd year depreciation $5,100 $4,900 $4,900 $4,800
3rd year depreciation $3,050 $2,950 $2,950 $2,850
Each succeeding year $1,875 $1,775 $1,775 $1,775
Trucks and vans depreciation limitations based on 100% business or investment use
1st year if special depreciation is claimed $11,360 $11,260 $11,160 $11,060
1st year depreciation $3,360 $3,260 $3,160 $3,060
2nd year depreciation $5,300 $5,200 $5,100 $4,900
3rd year depreciation $3,150 $3,150 $3,050 $2,950
Each succeeding year $1,875 $1,875 $1,875 $1,775


Notes: If business or investment use is less than 100%, the depreciation limit equals the amount listed above multiplied by the business or investment percentage. Special depreciation is available for new vehicles purchased in years 2008 through 2012. First year depreciation limit for 100% special depreciation is the same as the limit for 50% special depreciation.
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