IRS issues higher auto depreciation limits

January 23, 2023

For the second year in a row, the IRS has issued sharply higher new depreciation limitations for passenger automobiles.

The IRS updates the limits annually for inflation according to the automobile component of the chained consumer price index for urban consumers.

Rev. Proc. 2023-14 contains the Sec. 280F(a) inflation-adjusted dollar limitations on depreciation deductions for passenger automobiles — including trucks and vans — acquired after Sept. 27, 2017, and placed in service during 2023, for 2023 and each succeeding tax year.

For passenger automobiles that are applicable for Sec. 168(k) additional first-year, or “bonus,” depreciation, the limitation is $20,200 for the first tax year, an increase of $1,000 from the 2022 amount.

The succeeding-year limitations are $19,500 for the second tax year (an increase of $1,500 over 2022); $11,700 for the third year ($900 higher); and $6,960 for each year after that (an increase of $500). Read more.

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