2023 IRS Changes for Car and Truck Depreciation Limits

Every year the IRS issues an inflation-adjusted update to the depreciation limits for passenger automobiles placed in service for that year. These limits are updated for the inflation according to the automobile component of the chained consumer price index. Here are the changes made for the 2023 tax year:

            For vehicles in which bonus first-year deprecation applies, the depreciation limit is $20,200 (increased from $19,200) for the first tax year, $19,500 (increased from $18,000) for the second tax year $11,700 (increased from 10,800) for the third tax year; and $6,960 (increased from $6,460) for each following year.

            For vehicles in which bonus first-year deprecation does not apply, the depreciation limit is $12,200 (increased from $11,200) for the first tax year; $19,500 (increased from $18,000) for the second tax year; $11,700 (increased from $10,800) for the third tax year; and $6,960 (increased from $6,460) for each following year. These changes are shown under Sec. 280F(d)(7).

            Deductions on the cost of leasing automobiles is limited under Sec. 280F(c) where the limitation is calculated using the formula and tables directed under Regs. Sec. 1.280F-7.

https://www.irs.gov/pub/irs-drop/rp-23-14.pdf

If you would like to learn more or to set up a consultation call Marlies Y Hendricks CPA PLLC at either 716-694-3500 or 910-769-8730.

The above information is of a general nature only and should not be relied upon for specific situations.