If you use a car, light truck or van for business, you can claim depreciation in addition to your vehicle operating costs (gasoline, oil, repairs, insurance, parking and tolls allocated to business use) if that is more than the IRS’ standard mileage allowance, which for 2017 is 53.5 cents per mile. However, the depreciation deduction is subject to an annual ceiling. If the amount allowed under the regular MACRS depreciation rules is more than the annual ceiling, you can only deduct the ceiling. The annual ceiling does not apply to (1) certain delivery trucks, modified trucks and moving vans that the IRS considers to be not conducive to personal use, and (2) trucks, vans and SUV’s weight-rated by the manufacturer at over 6,000 pounds gross vehicle weight.
The tables below show the year-by-year depreciation ceilings for vehicles placed in service in 2017 (Rev. Proc. 2017-29, 2017-14 IRB 1065). Note that the first -year limit depends on whether “bonus depreciation” applies. For a vehicle that is purchased new and used over 50% for business in 2017, bonus depreciation allows an extra $8,000 increase to the first-year depreciation limit, assuming you do not “elect out” from the bonus rule. Bonus depreciation only affects the limit for the first year.
Depreciation Limits for Passenger Cars Placed in Service in 2017
|1st year||$11,160 ($3,160 if no bonus depreciation)|
Depreciation Limits for Light Trucks and Vans Placed in Service in 2017
|1st year||$11,560 ($3,560 if no bonus depreciation)|
Personal use reduces annual limit. The amounts shown in the tables above assume 100% business use of the vehicle, and must be reduced if there is any personal use. For example, if in 2017 you buy and place in service a new passenger car that you use 75% for business, the dollar limit on depreciation, taking into account the extra allowance for bonus depreciation, is $8,370 ($11,160 x 75%).