How much can you depreciate a vehicle?

The short answer, and what it depends on

A business vehicle is depreciable, but for a passenger automobile Publication 946 puts a ceiling on each year’s deduction. The limit is not on the regular MACRS depreciation alone: it applies to the depreciation deduction including the section 179 deduction and any special depreciation allowance you claim. That is why an expensive car cannot be written off in a single year no matter how much bonus depreciation is available. Two inputs decide what you can deduct: the year the car was placed in service, which selects the row of the table, and the share of its use that is business or investment use, which scales the cap.

The 2025 caps in the publication

The 2025 edition of the publication prints one table for passenger automobiles, including trucks and vans, acquired after September 27, 2017. For a vehicle placed in service in 2025 the maximum deductions are $20,200 in the first year, $19,600 in the second, $11,800 in the third and $7,060 for the fourth year and each later year. The first-year figure carries a footnote: if you elected not to claim any special depreciation allowance, or the vehicle is not qualified property, the first-year maximum is $12,200. The same table also lists 2024 ($20,400 with the allowance or $12,400 without, then $19,800, $11,900 and $7,160), 2023 ($20,200, or $12,200 without, then $19,500, $11,700 and $6,960) and 2022 ($19,200, or $11,200 without, then $18,000, $10,800 and $6,460), among earlier years. The calculator offers these four rows. Those are the published limits for passenger cars placed in service before 2026; the publication does not print a 2026 row, so check the current Revenue Procedure for a vehicle you place in service later.

What counts as a passenger automobile

The caps only apply if the vehicle is a passenger automobile: a four-wheeled vehicle made primarily for public roads and rated at 6,000 pounds or less of unloaded gross vehicle weight, or 6,000 pounds or less of gross vehicle weight for a truck or van. Vehicles used to transport people or property for pay or hire, and qualified nonpersonal use trucks and vans, are outside the definition. A heavier vehicle is not subject to the passenger-automobile caps, but the publication limits the section 179 election for heavy sport utility vehicles. A four-wheeled vehicle rated at more than 6,000 and not more than 14,000 pounds that is primarily designed or used to carry passengers can support a section 179 deduction of no more than $31,300 for tax years beginning in 2025, and $32,000 for 2026, unless it falls within one of three exceptions: seating for more than nine passengers behind the driver, a cargo area at least six feet long not readily accessible from the passenger compartment, or an integral enclosure around the driver compartment and load area with no seating behind the driver.

Worked example

You buy an $80,000 car in 2025 and use it 100 percent for business. Suppose you elect out of the special allowance and take no section 179 deduction. The five-year MACRS percentage for the first year is 20 percent, so the tentative deduction is $16,000. The cap is $12,200, so you can deduct $12,200. In year two the percentage is 32 percent, or $25,600, against a $19,600 cap, giving $19,600. If instead you claim the special allowance and the car qualifies, the first-year cap rises to $20,200 and the deduction is $20,200, because the allowance on an $80,000 basis would far exceed it. The publication’s own small example shows the other side: a $14,500 car placed in service on April 15, 2025, used only for business, with no section 179 and no special allowance, has MACRS depreciation of $2,900 (20 percent of $14,500), which is below the $12,200 cap, so the full $2,900 is deductible.

The business-use percentage scales everything

If your business or investment use is under 100 percent, you multiply the cap by that percentage, determined annually, and the depreciable basis is also cost times the business-use percentage. Set 60 percent in the calculator and the first-year cap on a 2025 car with no allowance becomes $7,320 (60 percent of $12,200). A short tax year reduces the cap by the fraction of months over 12. And as the listed property page explains, if the car is not used more than 50 percent for qualified business use you lose the section 179 deduction and special allowance and use straight line over the ADS period; see what is listed property.

The unrecovered basis does not disappear

When the caps reduce your deductions, you will still have basis left when the recovery period ends. The publication says you can keep deducting that unrecovered basis after the recovery period in each later year you continue to use the car for business, up to the later-year cap and your business-use percentage. In the publication’s example of a $31,500 car with $16,935 allowed over six years, the unrecovered basis is $14,565, and each later year you can deduct the lesser of the annual cap or what is left. The unrecovered basis is figured as though business use had been 100 percent, so a year of lower business use cannot be made up later.

Leases and the standard mileage rate

The caps generally do not apply to cars leased or held for leasing by someone regularly engaged in the business of leasing them. And if you use the standard mileage rate for a business car, you are treated as having elected to exclude the car from MACRS, so none of this depreciation applies; the mileage deduction calculator covers that route.

Limits of this page

This page uses the caps in Publication 946 (2025) for cars acquired after September 27, 2017. Older acquisitions, electric vehicles placed in service before 2007 and trade-ins have separate tables and rules. Use the section 179 and bonus depreciation estimator for the non-vehicle part of an equipment purchase.

Sources

• IRS Publication 946, How To Depreciate Property (2025): Chapter 5, Do the Passenger Automobile Limits Apply?; Chapter 2, Dollar Limits (heavy SUVs). Page last reviewed or updated by the IRS April 30, 2026. Read November 2, 2026.

Edition read: Publication 946 (2025), for use in preparing 2025 returns. Limits and percentages quoted are for 2025 unless a page says otherwise. For tax years beginning in 2025 the publication gives a section 179 limit of $2,500,000, reduced dollar for dollar once qualifying purchases exceed $4,000,000, and $31,300 for heavy sport utility vehicles. Its What’s New for 2026 section gives $2,560,000, a $4,090,000 purchase threshold and $32,000. For qualified property acquired and placed in service after January 19, 2025 the special depreciation allowance is 100 percent, with an election for 40 percent in the first tax year ending after that date; for qualified property acquired before January 20, 2025 and placed in service in 2025 it is 40 percent. Check the current publication and form instructions for your tax year. This page summarizes the publication and does not replace it. Marked for human review.