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New Depreciation Limits on Luxury Automobiles

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The Tax Cuts and Jobs Act changed depreciation limits for passenger vehicles placed in service after Dec. 31, 2017. If the taxpayer doesn’t claim bonus depreciation, the greatest allowable depreciation deduction is:

  • $10,000 for the first year
  • $16,000 for the second year
  • $9,600 for the third year
  • $5,760 for each later taxable year in the recovery period

If a taxpayer claims 100 percent bonus depreciation, the greatest allowable depreciation deduction is:

  • $18,000 for the first year
  • $16,000 for the second year
  • $9,600 for the third year
  • $5,760 for each later taxable year in the recovery period

This change applies to property placed in service after Dec. 31, 2017.

Share this tip on social media — #IRSTaxTip: Tax Reform changes depreciation limits on luxury automobiles. https://go.usa.gov/xPGCC

Information provided by www.irs.gov Issue Number: Tax Reform Tax Tip 2018-177

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